MHCO Columns

Phil Querin Q&A: Landlord Pass-Throughs of Public Service Charges

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Phil Querin
Querin Law
MHCO Legal Counsel

 

Question: As a park owner we pass through the sewer and water charges to our residents. Currently, they are on 5-year leases, all expiring at various times. The leases address our right to pass through utilities. However, fire and police fees have been attached to the water/sewer bills we receive from the city. May we pass those additional fees through, and if so, how much notice must we give to the residents?

 

Answer:  The short answer is Yes. The utilities section of the manufactured housing side of Oregon’s landlord-tenant law is ORS 90.560(4) provides:

 

  • “Public service charge” has the meaning given the term in ORS 90.315 (Utility or service payments).
  • ORS 90.315(1) defines:
    •  “Public services” payments to mean ‘municipal services and the provision of public resources related to the dwelling unit, including street maintenance, transportation improvements, public transit, public safety and parks and open space. (Emphasis added); and
    • “Public service charge” means a charge imposed on a landlord by a utility or service provider, by a utility or service provider on behalf of a local government or directly by a local government. (Note: public service charge” does not include real property taxes, income taxes, business license fees or dwelling inspection fees.)
  • ORS 90.570 provides: “A landlord, upon 60 days’ written notice to a tenant, may unilaterally amend a rental agreement[1]to require a tenant to pay to the landlord, as part of the utility or service charge, a pro rata proportion of any new or increased public service charge billed to the landlord by a utility or service provider or a local government for a public service provided directly or indirectly to the tenant’s dwelling unit or to the facility common area.” (Emphasis added.)
  • ORS 90.568 addresses “pro-rata billing” as follows:
    • “If allowed by a written rental agreement, a landlord using pro rata billing may require a tenant to pay to the landlord a utility or service charge that was billed by a utility or service provider to the landlord for a utility or service provided directly to the tenant’s space or to a common area available to the tenant as part of the tenancy. A landlord may include in pro rata billing a public service charge under ORS 90.570 (Public service charge pro rata apportionment).” (Emphasis added.)
    • A pro rata billing charge for tenants’ spaces must be allocated among them by a method that reasonably apportions the cost among the affected tenants and that is described in the rental agreement.
    • Methods that reasonably apportion the cost among the tenants include, but are not limited to, methods that divide the cost based on:
            • The number of occupied spaces in the facility;
            • The number of tenants or occupants in the dwelling or home compared with the number of tenants or occupants in the facility, if there is a correlation with consumption of the utility or service; or
            • The square footage in each dwelling, home or space compared with the total square footage of occupied dwellings or homes in the facility or the square footage of the facility, if there is a correlation with consumption of the utility or service.
  • A utility or service charge to be assessed to a tenant for a common area must be described in the written rental agreement separately and distinctly from the utility or service charge for the tenant’s space. (Emphasis added.)

 

Conclusion and Caveats. So, yes, to the above question: Prepare a 60-day written Notice of Unilateral Amendment explaining the public service charge and the pro-rata allocation approach. Keep records of these utility charges for tenants to inspect if they want, and when they increase, make sure tenants are notified as soon as possible.  Just like increases in utility rates, they may be passed along – they don’t require additional advance notice.

 

Utility pass-throughs can be very complicated for a variety of reasons. First and foremost, the legislation is created by committees of stakeholders including industry representatives for landlords (park and non-park owners), tenants, utility companies, lenders, and other interested parties. The results can be confusing, especially so because Oregon’s landlord-tenant law contains a “soft” bifurcation between non-MHPs and MHPs. I say “soft” because the MHP side, ORS 90.505+ occasionally depends upon and includes provisions from the non-MHP side, i.e., ORS 90.100 – ORS 90.493. These observations are not to diminished the legislative drafters’ skills – they must work with what they have.

 

Familiarity with MHP utility laws i.e., ORS 90.560 to ORS 90.584 (including various stealth statutes that precede ORS 90.560!) requires time, patience, and care. The above summary responds only to the limited question presented. It does not address the MHP landlord’s responsibility to make sure that all park documents address the current utility rules applicable to their park and are sufficiently explained to incoming tenants. If in doubt, legal counsel should always be consulted. ~ Phil

 

[1] Note: I recommend that each time a landlord seeks to “unilaterally amend” the rental agreement under Oregon law, a documents entitled “Unilateral Amendment” (or similar caption) be delivered to all affected tenants pursuant to ORS 90.155with the same diligence as if they were issuing a rent increase notice. This is really the only way the 60-day notice requirement can be established.