Instead, shut off the water to the toilet and place a sign on the door "Art exhibit: Non-functioning bathroom."

They'd also probably be more aware of how much water, gas, or electric they are using when they have to pay the bill after each cycle.  

Interested in getting some extra income with converting the extra space in the basement into a rentable unit.Basements in a one-family home can be lawfully rented only if the following conditions are met:Compliance with the Housing Maintenance Code for minimum room size.There is a minimum ceiling height of 7 ft.The walls, as high as ground level, must be damp- and water-proofed if HPD determines that subsoil conditions on the lot require it.The basement is occupied by one family and does not include boarders.Every room must have at least one window.The bottom of any yard or other required open space cannot be higher than six inches below the window sill of any required window in the room.

Due to this water being behind levees the water stayed up for 4 months. 

Quote from @Chris Seveney: @Charlene Kingsnorth have you had an sec attorney also review what you are doing as if you're are having multiple people as part of a loan participating in it depending on the state this could get you in hot water - so be careful  good point Chris some state allow fractionalized deed of Trust mortgages other do not or require PPM like documents prior to offering them..

I ASSUME you’re talking $400+ in extra expenses for providing water, power, sewer, gas, internet, communal area cleaning, and exterior maintenance.

You also mentioned an unpaid water bill, so be sure to deduct any outstanding balance from that bill as well. 

I work with a lot of MTR investors and what I am seeing frequently with multifamily acquisitions, particularly with new investors, is that they often test the property just like you're mentioning, as a way to dip their toes in the water and see what works in their area and for their personal style.

That would mean there is an approved site plan that includes roads, water, sewer, storm water, curb, gutter and any required buffers.

City water 200 yards away