Bipartisan bill restores tax-exempt status for developers’ sewer, water contributions; Rose Law Group transactional attorney Dan Gauthier weighs in


Sens. Jeanne Shaheen (D-NH), Lisa Murkowski (R-AK), and Maggie Hassan (D-NH) introduced legislation to address an unintended consequence of the Tax Cuts and Jobs Act of 2017 that increased costs for some builders and developers.

For builders and developers working in areas served by a for-profit, corporate water utility, a small tax change in the 2017 tax reform bill resulted in higher sewer and water costs. As part of the new tax law, a longstanding exemption to the tax treatment of contributions in aid of construction (CIAC) was removed to the detriment of housing affordability.

Now, in areas served by a corporate, for-profit water utility, when a builder installs new water or sewer infrastructure to support additional housing — at no cost to the existing residents — that infrastructure is taxed by the federal government.


“Passage of this pending bipartisan legislation would again exempt from tax certain developer contributions in aid of construction (CIAC), effectively reducing the cost of construction.”

~Daniel Gauthier