Building Permit, Plan Review, and Trade Permit Fees
In contrast to water SDCs, building permit fees are more consistent across cities. Denver’s $3,010 is on par with Phoenix, Portland and Salt Lake City. However, low-cost peers like Oklahoma City, Dallas and Des Moines range anywhere from just 11% to 45% of Denver’s fee.
On top of the variation in permit fees, many cities (like Nashville, Omaha, and OKC) do not charge plan review fees, which equate to roughly 50% of permit fees in Denver and other high-permit-cost cities.
Lastly, trade permits (for electrical, mechanical, and plumbing services) for most cities range in the low 100s, while Denver’s $1,500 is only outdone by Portland and Bozeman. The combined total of these three fees leaves Denver as the third most expensive city in our sample.
Permitting Timelines and the Cost of Delay
Denver’s average plan review time for major residential projects (new construction, additions, whole-home remodels) is 209 days,[viii] including both city and customer time. While this figure is skewed by larger projects, and city officials partially blame developer response times, delays are a recognized issue by city leadership. On April 14, 2025, Mayor Johnston signed an executive order establishing the Denver Permitting Office, promising all building permits, regardless of size and scope, would be fully reviewed within 180 days, with partial fee refunds if not met beginning May 14, 2025.[ix]
Assuming a construction loan rate of 7%, carrying costs run roughly 0.6% per month on the financed balance, so each month a permit is delayed adds directly to the cost of the home. On a $300,000 land-plus-soft-cost basis, each additional month of delay costs about $1,750. Denver's 209-day timeline versus Salt Lake City's 45-day benchmark implies roughly 5.5 months of excess delay, or about $9,625 in avoidable financing costs per unit. Across the United States, research has found that cities like Denver with high degrees of housing regulation take 2.5 times longer to approve projects than less regulated cities.[x] Long approval timelines reduce housing production and increase costs for buyers and renters.
Affordable Housing Linkage Fees
Perhaps the most unique cost barrier for Denver homebuilding is the Expanding Housing Affordability (EHA) Linkage Fee. The ordinance requires new market-rate residential developments to either dedicate a share of units as income-restricted affordable housing or pay a linkage fee, which for single-family construction runs $8.18 per square foot, or $16,360 for a typical 2,000-square-foot home.[xi] The only other peer market (among the 12-city dataset) with a comparable fee is Portland, which has an Affordable Housing Construction Excise Tax of approximately $3,160 for a comparable home.[xii] Other peer markets in our analysis have either voluntary programs, subsidy-triggered requirements, or state preemption that prevents mandatory fees entirely. Even beyond this peer group, Denver stands out nationally: among major U.S. cities, only a handful impose any affordable-housing fee on detached single-family construction at all, and several that do, including Los Angeles, exempt the smaller homes that Denver's fee continues to reach.[xiii]
Denver's EHA ordinance was enacted by City Council vote on June 6, 2022.[xiv] The policy was made possible by Colorado's HB 21-1117, signed in 2021, which superseded a prior Colorado Supreme Court ruling and, for the first time, allowed local governments to impose affordable housing requirements on new rental development.[xv]
For new residential developments of 10 or more units, the ordinance requires between 8 and 12 percent of units to be affordable (the exact share varying by market area and income tier) for a 99-year term, or payment of a substantial fee-in-lieu. For developments of less than 10 units, the linkage fee was phased in annually from 2022 to 2025 and indexed to inflation thereafter. [xvi]
A 2024 CSI analysis found that Denver permitted approximately 2,890 to 3,180 fewer housing units per year than it would have without the ordinance, while a representative 250-unit multifamily project in Denver required rents approximately $80 per month higher than a comparable Aurora project to achieve the same return on investment. Unlike the infrastructure cost-recovery mechanism of other fees, affordable housing linkage fees are a policy-driven subsidy that is often more politically contested, which is why most states either don’t allow them, or cities choose not to impose them.
Impact Fees
Denver has no formal impact fees for transportation, public safety, schools or parks. Like other low impact fee markets (Atlanta, Nashville, Dallas, Omaha, Des Moines), Denver relies on growth paying for itself through property tax base expansion. High-impact-fee peer markets like Bozeman, Boise, Phoenix, and SLC instead make new development pay directly for roads, parks, and public facilities through formal impact fees, a common approach in fast-growing western jurisdictions.
Notably, Portland has recently waived all SDCs for permits issued from August 2025 through September 2028 under a temporary housing exemption ordinance.[xvii] In a historic collapse of market-rate housing production, Portland produced just 818 market-rate units in 2024, the lowest total in 10 years. That figure alarmed city leadership and set the political conditions for dramatic intervention. Given developer feedback that fees were cost prohibitive, the SDC moratorium was enacted to promote the construction of 5,000 new housing units at an estimated cost to the city of $63 million that would otherwise go to parks, sewer and stormwater, transport, infrastructure and water.[xviii]
Sales Taxes on Construction Materials
Colorado's state sales tax rate of 2.9% is the lowest non-zero rate in the nation, but that headline figure is misleading for builders. The average local add-on rate in Colorado is the third highest in the country at 4.99%. In Denver, the total combined rate is 9.15% resulting in a total estimated tax burden of $7,686 on the materials needed to build a standard 2,000 sq. ft. single-family home.[xix] That figure is 60% above the national average of $4,782 and the highest in our peer city analysis.[xx]
Two peer markets, Portland and Bozeman, pay nothing in construction material sales taxes, because Oregon and Montana have no state sales tax. Cheyenne, just 100 miles north of Denver, sits at 5.0% combined, roughly half Denver's rate, and pays an estimated $3,900 on the same material budget. Dallas (8.25%, $5,858) and Phoenix (8.60%, $6,106) both carry higher state rates than Colorado but lower combined burdens, because their local add-ons are more modest.
Base Materials and Labor Costs
Beyond government-imposed fees, the underlying costs of materials and labor typically represent around 60% of a new home's total price tag – and these vary significantly by market.[xxi] The RSMeans City Cost Index (CCI) benchmarks total construction costs against a North American average. Among 318 major metros, Denver's composite CCI of 0.94 ranks 20th, slightly below the national average.[xxii]
Denver’s cost of material index (1.051, 7th) is notably elevated relative to its overall rank, reflecting genuine supply chain and commodity cost pressures in the Mountain West, while its cost of installation index (0.772, 22nd) is in the lower half of peer markets. Low-cost peers like San Antonio (0.846), Houston (0.857), and Dallas (0.859) benefit from cheaper materials and lower labor costs.[xxiii]
This context matters: because Denver's base construction costs sit near the national average, the $40,000+ in government-imposed fees documented above cannot be absorbed by below-average input costs – they stack on top of a mid-tier baseline, compounding the affordability burden passed on to buyers.
Denver vs. Peers
When government-imposed costs are summed, Denver’s total policy-imposed cost premium per new residential unit reaches more than $40,000—more than double the average across our 12-city peer group. No other metro in the sample comes close to this combined burden. Salt Lake City and Portland carry elevated tap fees and, in Portland’s case, an affordable housing construction excise tax, but neither approaches Denver’s aggregate. Dallas, Oklahoma City, Nashville, and Des Moines cluster well below $20,000 in combined government-imposed costs, illustrating that high-growth, high-production markets have largely avoided stacking these cost layers onto new development.
Permit Volume Trends
The permit volume data tells the same story. Denver single-family home building permit volumes have fallen 43% from their 2021 peak, the second sharpest percentage decline among all metro areas in the peer group, trailing only Salt Lake City. Boise, Dallas and Oklahoma City have grown their permit volumes from 2019 levels even after retreating from their own 2021 peaks, and Omaha posted roughly 15.8% year-over-year growth in the first six months of 2026.[xxiv] When the fixed cost floor for new construction rises, the marginal project that would have been built at lower cost thresholds does not get built, and production contracts accordingly.
What Explains the Cost Differences?
The elevated cost burden in Denver, and Colorado more broadly, reflects several overlapping structural factors. The first lies in how Front Range municipalities finance water and sewer infrastructure. Facing large capital needs and the high cost of acquiring increasingly scarce water rights, these systems recover much of that expense through system development charges levied on new construction rather than spreading it across the existing ratepayer base, concentrating fiscal pressure on new homes. A second layer consists of deliberate policy choices, including the EHA linkage fee and affordable housing mandates, that reflect genuine value trade-offs but carry real cost consequences that fall on homebuilders and, ultimately, renters and buyers. State sales tax policy then compounds the burden at the local level. While Colorado's 2.9% state rate is among the lowest nationally, local add-ons produce one of the highest combined sales tax burdens among our peer group, a meaningful drag relative to lower-tax peers like Texas and Oklahoma. These structural factors are important context, but they do not explain the majority of the Denver premium. The bulk of the gap is policy-addressable.
The Bottom Line
Colorado is in the midst of a housing affordability crisis, and our analysis identifies that the costs are not solely the product of market forces. A substantial share of what it costs to build a new home in Colorado is determined by policy choices made at the state and local level. In Denver, more than $40,000 in government-imposed costs are layered onto every new residential unit before construction begins (more than double the average across the peer group) and that premium sits atop a construction cost baseline that is already near the national average, leaving no room to absorb the added burden.
The findings throughout this report point to the same conclusion:
- Denver’s combined government-imposed costs exceed $40,000 per new residential unit, more than double the peer-group average, before a single board is nailed;
- The $16,360 affordable housing linkage fee is a near-singular outlier—five times Portland’s $3,160 and absent entirely in most peer markets;
- A 209-day average plan review timeline adds roughly $9,625 in avoidable carrying costs per unit relative to the Salt Lake City benchmark;
- Water system development fees of $10,450 run 91% above the national average and are rising further in 2026 after being frozen for more than a decade; and
- Single-family permit volumes have fallen 45% from their 2021 peak (the second sharpest decline in the peer group).
Structural factors and regional water scarcity provide important context, but they do not explain the majority of Denver’s cost premium. Much of the gap is policy-addressable, which is ultimately a hopeful conclusion. Costs imposed by policy can be changed by policy. Each fee, timeline, and tax examined in this report reflects a past decision. Future policies could meaningfully lower the cost of building a home in Colorado without sacrificing the legitimate public purposes those tools were meant to serve. As the state confronts a deficit of tens of thousands of housing units, market conditions will remain largely outside policymakers' control, but the costs they choose to impose on new construction are not. Reducing that policy-driven premium offers a meaningful opportunity to ease the strain on buyers and renters.