Phil Querin Q&A: Converting Water Systems and Billing (Well Water to Public System)

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May 14, 2013

Question: Our community has been on well water forever. There is a new water system available to hook up to. Under that system each space would have its own meter and a flat rate would be charged for the first fixed number of gallons per space. After the fixed number of gallons/space is used, the homeowner would be charged a price per gallon. Can we charge exactly what the water system charges on top of the current rent? Effectively passing on what we are charged for their individual use?

Answer: For purpose of addressing this issue, I will assume that the community currently includes the operating costs for the well in the base rent, i.e. it is not a charge to residents outside of base rent that is allocated to them on a prorata (i.e. per space) basis. Well water is not something you may separately charge the residents for under ORS 90.532. There is no recognized method under Oregon law to recover it separately from – or outside of – base rent. Since base rent may only be increased in accordance with the 90-day rent raise protocol described in ORS 90.600, there is no pass-through alternative for communities serviced by well water for drinking. Subsection (8) of ORS 90.532 limits utility charges for water through the following means: A landlord may not assess a utility or service charge for water unless the water is provided to the landlord by a: (a) Public utility as defined in ORS 757.005; (b) Municipal utility operating under ORS chapter 225; (c) People’s utility district organized under ORS chapter 261; (d) Cooperative organized under ORS chapter 62; (e) Domestic water supply district organized under ORS chapter 264; or (f) Water improvement district organized under ORS chapter 552. (9) A landlord that provides utilities or services only to tenants of the landlord in compliance with this section and ORS 90.534 and 90.536 is not a public utility for purposes of ORS chapter 757. Your question does not indicate whether the new water system falls into one of the above categories. If it does, then you are entitled to assess a pass-through protocol, so long as the other submetering statutes are followed What follows is brief summary of the applicable statutes. As you will see, the issues are technical and complex. In short, you should secure competent legal advice from an expert familiar with your particular situation. This article or summary should not be relied upon to the exclusion of obtaining that legal advice. • 90.532 This statute sets forth the permissible billing methods park owners may use for their water charges. • 90.534 This statute describes how a landlord may charge for providing a utility or service directly to the residents’ spaces by apportionment of the costs per space. • 90.536 This statute describes the use of submeters to each space and the appropriate billing method. • 90.537 This statute instructs landlords on how and when they may convert from one billing method to another. • 90.538 This statute describes the tenants’ rights to inspect billing records when an owner converts from one billing system to another. In your case, since you are on well water, the only records I imagine you would have would be the well water maintenance costs, since there is no direct water charge to you. • 90.539 This statute describes the park owner’s rights to access a resident’s space to read the submeter. Conclusion. Without knowing more, it is hard to say definitively whether your proposed billing method [assuming the system is permissible under ORS 90.532(8)], would be allowed. However, my guess is that it is not. The reason is that the legislation and legislative history that resulted in these statutes is based upon much discussion and anecdotal experience. The categories and protocols are very specific. If you were to submeter, I suspect you could not “blend” your charges to include the equivalent of a fixed fee for everyone, with a metered rate for the higher users. The concept behind submetering is that everyone pays for exactly what they use – no more, no less. You proposed system does not appear to do that. Additionally, I do not believe you may “convert” to this new system without making some downward adjustment in base rent, to account for the fact that the residents will no longer be using the well water – and therefore should no longer be paying the well maintenance cost. [Of course, if the well water were converted to irrigation, that cost – already in the base rent - would seemingly be permissible.]

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