Per Owner Water Charges

Our board is developing a new structure for individual billing for water usage. We have a growing number of owners who rent their property through Airbnb or other rental matching platforms, representing a huge shift in the nature of the community, which, until now, was used for owner vacations or summer residences. We have a community well system. Our water usage has skyrocketed over the past three years, almost doubling. This has added extra stress on our system including the need to replace pumps, pay for more salt, etc.

We attempted to get the community to vote for a renter's fee of 20% of the HOA annual fee, but it did not pass (waited too long, too many renters.)

Water has historically been included in the annual HOA dues, but we need to increase our revenue to manage increasing costs, not just for our water, but also for increased dirt road maintenance and damage done by renters to our drainage ditches, etc. And then there is the quality of life issue for those who do not rent...

Our homes are already individually metered. Can anyone tell me what would be a reasonable per gallon rate for water? We have established a base amount that would be included in the HOA fee, and looked at what municipalities charge, but we have only thirty homes, so our costs are not spread over thousands. If anyone can help me with a reasonable rate, I would appreciate it! And, if there other pitfalls I should understand, please clue me in, as I am new at this. Thank you!

Thank you for your reply! I should clarify that we are the water department. We run our own water system. So, charging what a municipality would charge ($.006 per gallon), where costs are distributed across thousands of users, would not provide any meaningful revenue to tackle our costs. And yes, many people are...different! Since water has been included in fixed annual dues, they give no thought to water use. They even let leaks cost us thousands of dollars rather than fix them. Yikes. Thank you again!

Just saw your second post.

If your goal is to reduce water usage in any way, then individual accounts are the way to go - read the meters and bill people separately outside of the regular assessment if your governing docs allow that. But you will still have the issue of people thinking that HOA bills are less important than those of other companies that can shut off service to non-payers.

My inner accountant/auditor is also bothered by the idea of an HOA (a nonprofit corporation) running what is essentially a separate business inside of the HOA structure. If your HOA's auditor has signed off on it, so be it - but it just isn't sitting right with me (too much potential for things to get lost in the books if they aren't separate, for one).

Has anyone ever broken down the cost associated with being your own water company? Cost of pumps, electricity, pipes, maintenance, repairs, etc? It seems there should be a way to identify what being your own water company costs the HOA and then spread that out amongst all owners on a per gallon basis. I'm assuming you know how many total gallons are being used.

To promote focus (mine if no one else's): This is largely about re-couping the maintenance and repair costs associated with providing water and drainage of same. This is not about the gallons of water per se that these airbnb renters et cetera are using.

Do your HOA's governing documents allow the HOA to impose Special Assessments? If so, can it do so by formula as described below? There is a good chance this is in fact not allowed. You would have to say more about what your covenants say about assessing Owners.

If the governing docs permit, then I advise taking the previous fiscal year's bills for pumps, salt, water system labor, road repair et cetera and Special Assessing each unit in proportion to their fraction of water consumption. For example:

The total cost of all maintenance and repairs involving the water system for 2020 was $10,000.

The sum of all 30 water meters' usage for all of 2020 = 2.5 million gallons of water.

Unit 18 used 150,000 gallons for all of 2020.

For 2020 Unit 18 is Special Assessed 150,000 / 2,500,000 * $10,000 = 6% * $10,000 = $600

This certainly got my attention, especially when you posted that your attorney pointed this out. I presume he/she did so to make a point about what legal powers the HOA has on this topic. Your HOA's set-up is

One of my favorite HOA attorneys where I am (who actually contributed mightily some years ago to the state's HOA statute), a man of some age, once said to a local HOA Board in an interview, as his bottom line of advice: "Be reasonable and fair." You are clearly attempting to do this. I would add the Board also has an obligation to address the growing bills, including assessing where possible, as fairly as possible, so as to incentivize water conservation and minimize costs to all.

Susan

You need to look closely at how yor association can raise yearly assessments (dues) versus a Special Assessment. If you can then raise dues to cover expenses plus repair/replacement as in a Reserve.

That attorney is a smart guy. Fair is my goal! Thank you so much for your input!