Question about private sewer billing

[Tony H.]

I'm looking at a mobile home park that has city water and a sewage lagoon. The park is currently paying for water, so it looks like it could save several thousand a year by submetering, though I had a question about billing tenants when they are on private sewer. From the park's P&L, the cost for maintenance of the lagoon is around $2400 / year, plus electricity to the pumps, etc. (includes testing, chemicals). Is it possible (or legal) to bill that cost back to the tenants, and if so, how would I go about doing that? Would it just be (cost / lots) / 12? Thanks for the help!

[Adam Johnson]

I'm not trying to give legal advice here, consult with an attorney before doing anything on this.  I understand what you are trying to accomplish here, but sometimes there is more than one way to accomplish the same goal.  My first reaction is that trying to bill separately for sewer could turn into a billing (and potentially legal) headache.  Instead of creating another bill for sewer, if that cost is a concern, what about simply raising the rent?

You will find that some expenses are simply a part of doing business.  Survey other nearby parks to see what they charge per month for lot rent as well as what is included in the rent (trash, water, sewer, street lights, etc.).  Come up with the closest apples to apples example you can come up with.  That will tell you if there is room to bump the rent.  That will accomplish the same goal of increasing net income, but you will likely find that it is easier than trying to come up with a creative way to bill for private sewer.

You are on the right track to look at submetering the water.  If the park currently provides water as part of rent, this is a tough cost to keep control of.  Tenants tend to care more about a drippy faucet or toilet flapper in their home if THEY have to pay for the wasted water.