Flat Fee Charge from Township's Water Department

Working on a DD on a park and noticed the sewage bills are very high.  After talked to the water department, there is $31/unit per month Debt Fee was billed to the park.  The township spent millions of dollars on treatment plant(s) and passed the cost to everyone according to the staff there, which I need to verify on residential & commercial accounts. The park has Three master water meters but was billed $31 per lot (not per water meter) each month!  Has anyone experienced this type of billings from cities/township?  Was your park billed per lot per month as well?  Thanks in advance.Shan

A new sewage plant costs a lot of money.  It was probably paid for with bond financing for which all users pay back the debt service at a flat rate for typically 20 to 30 years.  After that, it goes away.  Let me point out that there is a ton of design and engineering work done before a permit is even applied for.  Also, a number of authorities have to sign off after their review before a permit is issued.  Then, the actual construction is class A work and the unions in your area probably have a choke hold on that type of work.  So yes, the cost to put a new or replacement plant into service is a lot, in your case $31 per lot per month.  However, that’s not to say that you shouldn’t check their rate structure to make sure that they are charging you correctly.  Technically, your lots are residential users and not commercial users.  Commercial and industrial users, of course, would be paying a much higher portion of the debt service.  Check to see that you are being billed at the residential rate and not the commercial rate.  BTW, the only money that the water department has is money that comes from rate its payers.Jim Allen

The owner was sick for a long time and his relative was/is managing the park.  They never checked on all the bills, just keep paying them.  From day 1 when I saw the high sewage bills, I asked him why, he said he was told that this property zoned as commercial, therefore, was billed as commercial rate!  Now it make sense!!  They never know they were charged the flat fee per lot!  On the sewage bill, it only listed the water usage and the total amount it should pay.  No itemized charges at all!  I discovered this by asking the township to provide me their calculation formula to help me understand the bills.My question is: what documents should I prepare to present to the township councils that the park should be charged at the residential rate not commercial rate if it was true?  And yes, I was reading the township’s website regarding the sewage rate, it did state that the commercials and industrials are billed @ different rates comparing to residentials.  Thanks in advance.Shan

I own a park in Texas that is billed like this. I have some flat fees based on the number of lots, and then also pay for the usage of the water. The sewer is probably broken into 2 parts, ‘raw’ sewage and ‘storm’ runoff. For some of our parks the storm runoff is based on sq/ft of the property. In short- all of my sub metered parks base something on lots, sq / ft etc… 

Mr. Allen & Mr. Johnson, thanks for your comments!This park is in PA and I am here now for a week to clear some DD tasks.  Plumber, Electrician, Home Inspector have been scheduled to come out this coming Monday & Tuesday.  About the sewage billing, I will do more research on it and decide what I am going to about it.  With the high sewer bills, the #s still work, just not as rosy as I would like to!  Again, thanks for sharing your knowledge and experience.  Your guys are awesome!!Shan

Post the township’s website here so that I can go read it.  Their reasoning for assigning you the commercial rate is that you are a ‘for profit’ business, thus are commercial and can pay a little more.  Obviously, an actual commercial or industrial user would have way more capacity to pay for debt service.You may want to convert tenants to be individually billed by the township.  Then take all documents including a plot plan to their hearing.  Before that, check with a couple of nearby apartment owners to see how they are being billed, they should also be billed as residential no matter who pays the bill.  And just because the numbers still work it doesn’t mean that your tenants should be paying a commercial rate when they are residential users.  Any multi-family facility should be billed at the residential rate.Jim Allen

Jim,I agree with you.  The current owner has never checked on his bills.  When I talked to the township’s staff and asked her to direct me to the right person to get more information about this Debt Service charges, she wanted to quickly get off the phone.  I will circle back with them on this subject after I have done my homework.  I just PM you the township’s website and please feel free to call me.Thanks.Shan

Thanks Jim(s) and Shan, This kind of discussion is very useful to me, as I plan to be doing DD on several parks in the near future (package deal).  Knowing what other wise people are doing is helpful to guide everyone that reads the Forum.Brandon@Sandell

Indeed!  I have learned a lot from this forum as well!  I think that was the intention that Frank & Dave set up this forum to help each other learn and grow, to exchange ideas, to share experience & knowledge.  I am grateful to be on this forum!Shan

I have also just come across this on a park I’m in contract on. Park charges flat fee of $22 for sewer and $24 for water but on all lots, regardless of occupancy. Park is 70% occupied so actual costs to me are closer to $70/occupied unit. Numbers still work and pretty strong market so confident I can fill empty lots and get average down. Or just pass through in form of rent raise. Main question here is whether anyone has ever seen a small town abandon the flat fee structure. I don’t think it’s associate with a bond issuance in my case although I’m not yet certain. Kind of a catch 22 I suppose – while I’m overpaying for water/sewer I don’t need to be hyper focused on leaks or have to allocate any funds to maintenance (no town meter whatsoever on park). Any pointers from anyone with any experience around this is appreciated.

We had this same issue and what we did was work out a deal with water/ sewer department to reduce the bill to occupied homes. We then had to cap off sewer /water. As a home became occupied/ moved in, we then would tell them to bump the bill up by 1 lot so that way we weren’t getting crushed on the bill.