To prevent this I pay the water bill and require the tenant to pay me a fixed monthly water prepayment amount set to be a little higher than the historical water bills with a clause that this amount can be adjusted up or down depending on actual water usage.  

Hopefully, our tenants see that if we don’t raise rents, but have them responsible for they’re own usage.

So the water usage will certainly go up with full occupancy, but I wouldn't imagine it would be much more than the $6600 you have estimated. 

My property manager argues that I should pay for water because:    -  If water bills are unpaid, the City of Grand Rapids can put a lien on your home even if the bill is in your tenant's name    -  The cost of water paid by the landlord is offset by higher base rentsMy thought process is that the cost should be passed to the tenants because:    -  With the tenant paying the bill, they will be most usage conscious and overall cost will decrease    -  I am skeptical that having the landlord pay for water results in a dollar for dollar increase in base rents    -  I have always had the philosophy that as many utilities should be passed to the tenant as possibleMy plan is to push my property manager to change leases moving forward so that tenants pay for water, but I wanted to get the BiggerPockets community's thoughts in case I am missing something here?  

Monitor utility usage.

Determine the price for the 50% share then define the terms, conditions, splits, equitable usage plan, renting rules, furniture plan, capital contribution terms, and exit plan in the operating agreement.

If you look around, you'll probably find that landlords of multi-family properties, condos, townhouses, are more inclined to pay for the sewer and trash type utilities since they're just a set fee, whereas things like cable and electricity and water usage can vary greatly between tenants, so those types of charges should be the tenant's responsibility.

It's definitely worth doing, the only thing that's a pain is tracking the water usage and doing the billing.

Account Closed I might have had a couple of bottles when I was posting that.And I apologize to the community of the inappropriate comment regarding that kind of markup.

For instance, if three 60 watt bulbs are shared, they ding you for $3.18/month of shared usage, and insist that you take that amount off of the resident's rent(I have it down to the penny, since this happened to me a few weeks ago.