Utility billback in Net Income


#1

Evaluating a park that has city water and sewer and submeters these expenses back to the residents. My question regards whether or not anyone has seen the amount that they are billing the tenant for these two expenses included in the net income? Also, there is a difference in what they are billing the tenant for “income” and what they are listing as operating expense. Any advice on whether this is peculiar, and what most P&L’s will have in net income aside from lot rent is appreciated.
Adam


#2

Yes, it’s common to see water and sewer billback included in net income, and you should see it offset (minus leaks) in the expenses. Though less common, some parks also provide cable + Internet as a service to residents which would be included as an income item as well.


#3

Yes, this is typical. We have an income line item for Water/Sewer bill-back (actually several: Water monthly ready-to-serve charge, Sewer RTS, Monthly water usage, Monthly sewer usage, admin fee, late fee).

This is a separate income item from Rent and separate from Fees.

The rates are set by the county on a yearly basis. So we charge 50xMeterRate(3/4") and we are only ourselves charged 3xMeterRate(2") because we have 3 meters that feed the 50 lots.

The RTS charges we get from the residents may more than offset our own water charges, but we have the costs when the sewer/water fails and that is baked into the cost of keeping the system RTS.


#4

Thank you so much for the information. Brandon, if you would be able to elaborate on what a ready-to-serve charge includes in your parks this would be very helpful as well.


#5

"Do I have to continue paying the monthly “Ready to Serve Charge” on my water and sewer bill even if the meter is removed and there is no usage?

Yes, the Ready to Serve Charge is for capital improvements to the system and covers the required payments for bonds issued to construct and maintain the utility system. The costs to operate the system make up the commodity charge that is applied against the customer’s actual usage."

Looks like a capital improvement charge to repay the cost of construction and continued maintenance.