Phil Querin Q&A: Additional Government Fees

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March 28, 2013

Question. The City of Gresham is now charging a “Public Safety Fee” on every mobile home space in the city. It starts at $2.40/month/space and escalates to $7.19/month/space in June. Park owners have to pay the fee for all residents and then try to collect it back from them. If the residents have their own utility accounts with the City, they pay their fee directly, but most parks pay water and sewer utilities in bulk. What can you tell me about this Public Safety Fee, and whether I can treat it as a utility or service, and pass it through to park residents?

Answer. First, one caveat: This Answer is not intended to constitute legal advice. It is educational only, and should not be relied upon by an MHCO member in lieu of consulting their own legal counsel, who is familiar with their own specific factual situation. Let’s start with a definition of a “utility” under Oregon’s Residential Landlord Tenant Act. Like all legislation coming out of Salem, there is no easy answer. The statute is found at ORS 90.315. I will try to summarize the relevant portions for purposes of this Answer: Oregon Law. 90.315 Utility or service payments; additional charges; responsibility for utility or service; remedies. • A “Utility or service” includes but is not limited to electricity, natural or liquid propane gas, oil, water, hot water, heat, air conditioning, cable television, direct satellite or other video subscription services, Internet access or usage, sewer service and garbage collection and disposal. [Italics mine. PCQ] • A landlord must disclose to the tenant in writing at or before the commencement of the tenancy any utility or service that the tenant pays directly to a utility or service provider that benefits, directly, the landlord or other tenants. A tenant’s payment for a given utility or service benefits the landlord or other tenants if the utility or service is delivered to any area other than the tenant’s dwelling unit. [Italics mine.] o If a landlord knowingly fails to disclose such payments, the tenant may recover twice the actual damages sustained or one month’s rent, whichever is greater. • A utility or service charge may only include the cost of the utility or service as billed to the landlord by the provider. o A landlord may add an additional amount to a utility or service charge billed to the tenant if: • The utility or service charge to which the additional amount is added is for cable television, direct satellite or other video subscription services or for Internet access or usage; • The additional amount is not more than 10 percent of the utility or service charge billed to the tenant; • The total of the utility or service charge and the additional amount is less than the typical periodic cost the tenant would incur if the tenant contracted directly with the provider for the cable television, direct satellite or other video subscription services or for Internet access or usage; • The written rental agreement must describe the additional amount separately and distinctly from the utility or service charge; and • Any billing or notice from the landlord regarding the utility or service charge lists the additional amount separately and distinctly from the utility or service charge. • A landlord may not require a tenant to agree to the amendment of an existing rental agreement, and may not terminate a tenant for refusing to agree to the amendment of a rental agreement, if the amendment would obligate the tenant to pay an additional amount for cable television, direct satellite or other video subscription services or for Internet access or usage. • A utility or service charge, including any additional amounts added pursuant to the provisions immediately above, is not rent or a fee. • Nonpayment of a utility or service charge is not grounds for termination of a rental agreement for nonpayment of rent, but is grounds for termination of a rental agreement for cause. • If a landlord fails to comply with the paragraphs above regarding disclosure of the additional charges, the tenant may recover from the landlord an amount equal to one month’s periodic rent or twice the amount wrongfully charged to the tenant, whichever is greater. Without getting into a detailed discussion of the pass-through laws contained in ORS 90.531 – 90.530, suffice it to say that subject to several limitations, park landlords are permitted to pass through utility and service charges to their tenants. So assuming that the landlord’s pass-through program was legally implemented and is legally described in the written rental agreement, the issue is whether the City of Gresham’s “Public Safety Fee” constitutes a “utility or service,” as described in ORS 90.315(1)(b), which provides that it includes but is not limited to: “…electricity, natural or liquid propane gas, oil, water, hot water, heat, air conditioning, cable television, direct satellite or other video subscription services, Internet access or usage, sewer service and garbage collection and disposal.” Clearly, the statute, by its own terms, says that a “utility or service” can include more than what is described above. Unfortunately, it gives no guidance as to what that might be. A quick online check of Oregon definitions, seem to presuppose a “public utility”; e.g. sewer, water and electricity. How, the definition of “utility” is much more generic, i.e. “something useful.” Moreover, we can see from the examples given in the ORS 90.315(1)(b), that several are not publicly owned. And the word “service” is so open-ended as to defy a specific definition, other than “something provided.” Accordingly, the definition of a “utility or service” is not rigidly defined by ORS 90.315, and, depending on the circumstances, can include charges for “useful things or services” imposed by a government body, even though they were not specifically enumerated in ORS 90.315(1)(b). City of Gresham’s Explanation. Now let’s look at the City of Gresham; how do they describe it and what is it intended to do? On its website explaining the fee, the City goes to great lengths to call it “temporary.” It is a single line-item that is added to customers’ water bills. It appears under the heading “Residential Utility Charges.” The Gresham website explanation of the fee is the following: “The temporary Police, Fire and Parks Fee *** goes into effect Feb. 1 for single-family households, multifamily property owners and businesses to help maintain essential police positions and keep our fire stations open. The per-unit fee was shaped by a public input process in 2012 and includes a phase-in for multifamily properties.” The website’s FAQs add the following points: • 95% of the fee proceeds will be used to support public safety services. The remaining five percent will go toward Parks. • Whether or not the fee will be passed on to a tenant will be determined by the lease or rental agreement. • Financial assistance is available to those who qualify. A rental assistance program has been created to help low-income families and individuals pay the fee. Contact Human Solutions at 503-548-0200. The City offers an assistance program that provides emergency funds to help qualified utility customers that are experiencing financial hardship. Apply for the utility bill assistance program at 503-618-2373. Non-profit housing providers who own and operate multifamily properties that are restricted as low-income housing by a recorded regulatory agreement or by the Office of Housing and Urban Development may be eligible for assistance. For more information contact Rachael Fuller at 503-618-2255 or Rachael.Fuller@GreshamOregon.gov. • Owners of multifamily properties will be charged the fee per unit in the building. However, those with more than three units have been granted a gradual phase-in period. These property owners will pay: A 4.1% vacancy discount will be applied to the fee for all multifamily development. Multi-family property owners will pay: o $2.50 per unit for February-March o $5 per unit for April-May o $7.50 per unit from June 2013-June 2014 Conclusion. I have not conducted an in-depth evaluation of this issue or the law. Subject to that limitation, it appears to me that a good argument can be made that the Public Safety Fee is either a utility or a fee, and as such, may be properly passed through to community residents. And since it is a prorated flat fee, it cannot be said to benefit other tenants or the landlord. If and when passed through, it should certainly be explained to the residents, and appear as a separate line item on their invoice.