I’ve been reading your threads here and they are very helpful, thanks for all the knowledge! I thought I would put out a question to see if all of you might have some insights.
We are involved in a MH park in Florida and I am helping to bring the rents up to market rate. Currently the rents are far below market rate (30%!) and we pay for all utilities (water/sewer, trash, landscaping). To bring the park up to par with comparable parks in the area we are considering:
Raise rents to market rate (10%/yr.) and we continue to pay utilities (don’t have to deal with utility billing)
Raise rents gradually over 4 years and add one utility to the tenant’s bill each year (ie. $10 increase in rent and install meters so tenants pay water / sewer costs.)
Raise rents gradually and charge a flat fee to each tenant for water / sewer based on avg. water cost for the whole park. (Can you do this?? Will tenants balk at splitting of the bill equally?)
Generally, what is a fair amount to raise the rent that you have found is tolerable to the tenants?
Any thoughts and insights would be greatly appreciated. Thanks!
I prefer billing for water and sewer based on actual usage because it encourages ecological use of resources. A flat rate equally divided provides no incentive. However, whatever you choose, look at your state’s public utility regulation to be sure what you do is legal. If you bill for utilities, there is often a very specific methodology that is permitted and invoices must contain very specific information (including a disclosure to contact the state regulators in some cases). For example, Indiana requires the following statement to be provided by law.
If you believe you are being charged in violation of this disclosure or if you believe you are being billed in excess of the utility services provided to you as described in this disclosure, you have a right under Indiana law to file a complaint with the Indiana Utility Regulatory Commission. You may contact the Commission at (800)-851-4268 or IURC: Indiana Utility Regulatory Commission.
Our experience has shown that initially, all tenants are upset, but come back to terms within a few months. Those first few months are critical as that is the time the tenant’s start calling government officials to complain how bad you are. If a tenant calls the regulatory board to complain, they will start an investigation, so you want to be in compliance. If are not able to willing to comply, you can hire third-party billers.
Thanks for the great insight mPark,
I also like that sub-metering encourages resource conservation.
I will check with the local regulatory bodies and see what steps we need to take to get sub metered asap.
I did not want to mention this in my original posting because at the time we were being investigated by the regulatory commission in one of the states in which we operate. We started billing for water and sewer at one of our properties, so one of the tenants became irate and reported us to the regulatory commission. After the commission’s board of attorneys reviewed our methodology, they determined that we were in compliance and did not violate the law.
The point is, you have to be very careful in your methodology to bill for utilities. After going through the investigation, I learned that many mobile home park operators do not fully comply but are lucky in that they are never caught. Please make sure you follow the law, or you could have issues.
There are very detailed requirements and each state is different. I know for a fact that many Indiana park operators do not put the following paragraph on their statements, which is required by law:
" If you believe you are being charged in violation of this disclosure or if you believe you are being billed in excess of the utility services provided to you as described in this disclosure, you have a right under Indiana law to file a complaint with the Indiana Utility Regulatory Commission. You may contact the Commission at (800)-851-4268 or www.in.gov/iurc."
Thanks mPark,
I’ll take you up on your suggestion and make sure we have all of our regulatory ducks in a row before Submetering.
I’m curious, did you have individual meters for each site and were you using a billing service or sending out the bills yourself?
There is a local company that will read the water meters, send out bills to tenants, collect checks and send them to us. They said their fee is about $3.50 a site/month. Seems like a good deal to avoid the hassle of billing… What do you think?
In Florida, most of the state, the water and sewer re-seller (MHP owner billing tenants for their utilities) of utilities is monitored by the Public Utility Commission:
However a re-seller is exempted regulatory oversight as long the as re-seller complies by the PUC’s regulations;
A violation will cause the re-seller to fall under as a regulated utility (same amount of over site as a municipal utility supplier);
Not allowed to be a re-seller;
In severe cases, criminal prosecution.
Although the above may seem daunting, basically:
You can not have a profit motive when billing your residents for water/sewer (garbage is unregulated);
The billing should “easily” be calculated by the resident;
Billing questions and concerns should be completely addressed.
A good third party sub-metering service will eliminate the possible liabilities, and their reasonable administrative costs are paid by the tenant.