Insane water bill ... how do you handle this?


#1

I am looking at a distressed 300 lot park. Very low occupancy, lots of vacant homes, and the place is on the verge of closing. I can buy for 125k with 15,000 down with owner financing with no payments for 6 months. I would be on the hook for sizeable back owed water and property taxes. This deal intrigues me as far as turning it around and possibly even flipping in 6 months.

Soo now my question, this park has 3 water meters. Which sucks in my opinion because the city is going to charge you more money than if you had 1 meter. When you add up the combined Water Service Charges and Sewer Service Charges… it comes out to a little over $3000.00. So before even a drop of water is used- the owner would be stuck $3000. How do experienced park owners here handle this? Do you negotiate with the water department to reduce fees? What do you ask for? There is also a big back due water bill-- it seems a city has little incentive to give you a break on water. But perhaps they could do a 1 time adjustment. Let me know! Thank you


#2

Have you looked into sub-metering for each tenant? Put the water bill on the tenant that way the park is not receiving or footing the bill. There were a few threads on this topic, I know @Jefferson had suggested a sub-meter service at some point on the forums.

Here’s a thread to look at:


#3

I would first call the city and ask how bills are calculated, and have them walk you through the bill and how its calculated. Generally the billing isn’t arbitrary and has fixed formulas. If what they’re telling you is reasonable and how they’d treat other customers in the area, you’re stuck with it going forward, if not then fight it.

On the face of it, a fixed $10 per lot cost ($3000 over 300 lots) seems very reasonable if the park was full, and somewhat unreasonable for a mostly empty park.

Regarding the delinquent bill, I’d just explain the situation to the city and that the park is at risk of closing down. I’d let them know I’m trying to negotiate price reductions with all parties involved to keep the park open, and ask if they have any flexibility on the delinquent water bill.


#4

Thanks Snickfish and Noel_S…… well I talked to the city and I found out there are two 4 -inch meters with a service charge of 2600. With the park being soo empty-- the water department lady said you could try 2 inch meters for a service charge of 700. That would be a significant savings. She also mentioned the meter pit was flooded and needed a sump pump. I think that information could help as far as arguments for flexibility on the delinquent amount because maybe the meter is faulty.


#5

If they are unreasonable---- what options are there as far as fighting it? I’m assuming that would involve litigation?


#6

It sounds like they are being reasonable in that they’ve already floated an idea that would significantly reduce the monthly overhead.

If the city is charging you differently than they would other similar customers, and they won’t be reasonable and adjust their rates, then yes I’d probably get an attorney involved. This is probably a fairly rare scenario though.


#7

The cost of the meters is likely set by a schedule. See if you can run the park with smallest meter available. Likely you cannot because of water pressure problems. Find out how the lots are plumbed and calculate your losses on the empty lots. Then go to the city and see what they think about the economics of MHP’s and are they going to help or hinder.

Then take the cost of the city’s expectations back to the seller. Empty lots are literally costing you money.