Regulatory Risk of Private Utilities

I been thinking about this subject for a while and thought I would write a little something on the subject.
I would love to hear others thoughts on the subject.

http://merrillwater.com/file/Regulatory-risk-of-private-utilities.pdf

4 Likes

This is great @PhillipMerrill, thanks for putting this together! I did have a couple questions…

  1. We run into Parks all the time with sewer at the road (where it has “become available”) but are using septic. If there’s a requirement to connect to these public systems, first observation is that the enforcement of that lax. Are there actual financial penalties that could be assessed to MHP owners, and if so, what is the materiality of those when considering the capital cost to connect? Or if the permit is revoked because of this does that mean you effectively lose your license to operate? How concerned should Park owners in this scenario be?

  2. With water systems do you see common configurations which are less likely to have issues with elevated contaminants? I presume there are regional variations, but maybe if you have a 600+ foot deep well there is typically less risk? This wouldn’t detract the need for any diligence but it could be an indicator explaining why a water system does not have any treatment equipment.

  3. Is it fair to say there is not insurance available to cover regulatory risk - e.g. is that almost seen as an act of god category?

With regard to the requirement to connect to regional sewer system it is usually just boiler plating and becomes a sort of sword of Damocles hanging over the park. Many permits dont even have it but I think if you dug through the regulatory code it would probably be there. The assumption is the the regional sewer systems provides better treatment. It is usually brought up if the system fails or is struggling with compliance. Then out come the large connection and tap fees.

As far as well contamination goes microbial and nitrates as usually a function of either shallow well depth, faulty well surface seal, contaminated aquifer , geology or all four. Im looking at a park with all four. No surface seal, shallow depth 100 feet deep, drainfield to close, aquifer is contaminated to 300 feet based on geology of area. I like the fun ones :slight_smile:. Well construction is the key a 600 foot well could have a faulty surface seal and be contaminated. However contaminates like arsenic or uranium are generally from the formation and if you have it it will have showed up already. Areas with oil well fracking might be the exception to what I said above.

As far as insurance for regulatory risk I have yet to see it but I will leave that answer to the experts.

2 Likes

I think I just felt my brain get a little bigger … :relieved:

1 Like

Sorry to many years as a teacher :slight_smile: I tend to go a little over board with the details.

1 Like

This is Great information. Thanks!