Emotions ran high at Tuesday night’s City Council meeting during a discussion of utilities at the city’s new eight unit housing complex. Some tenants of the building are upset over a shared utility charge they say was not part of their lease agreement. Full disclosure: the reporter is a non-lease-holding tenant of the building. 

The utility charge in dispute covers the cost of running the building’s boiler room, common area lighting, water and sewer. Heating is included in the rent. Tenant Roger Bacon said at the meeting that when he moved in, he understood the shared costs to be part of the rental rate.

“If I want my electricity costs to go down, I go over to the light switch and turn it off. I turn my heater down. I do it, I do when I lived in my own house, I did it when I lived with OC [Ounalashka Corporation], I do it now. But the problem is that I have control over the common area lights, I can’t turn them off. I can’t effectively tell the other people ‘turn your heat down’ so my bill goes down. Those costs, I understood, were going to be part of my rent. And my lease agreement says heating is included. I would argue that heating means the whole system, not just thefuel.”

The building’s shared costs have been running roughly $200 per apartment per month.  Tenant Lori Gregory said that was a cost burden she did not expect when she moved into the apartment complex.

“For the rules to be changed after we’re in there, when there’s nowhere to go, that’s just mean and I don’t appreciate it.  I appreciate my job and what I do, but I just don’t think that’s fair.  I would like to have that $210.74 off my bill please.  Thanks.”

Whether that will happen or not remains to be seen. At the meeting councilors focused less on the specifics of the issue, instead discussing whether or not the city should be recouping all of the building’s operating costs from tenants.  The city’s finance director is out of town and administration couldn’t provide a breakdown of how those costs stack up against the rents generated, but Mayor Shirley Marquardt told council that the building runs at a considerable deficit because of depreciation.

“Talking about whether the housing fund and specifically the 8-plex is making money or not.  It’s not.  It is a constant drain.  Depreciation is what people are forgetting.  It’s about $1600 per unit per month, each year.  So at this point, not only is the city not making $50,000, the city is losing money, as we always have.”

Assistant City Manager John Fulton agrees.  He adds that no city-owned building fully funds its depreciation on rents. Nevertheless, he’s proposing that the city raise rental rates for the two and three bedroom units to $1450 and $1800 respectively in order to recoup more of the building’s costs. Fulton says as far as the shared costs of the boiler and common area electricity – the city’s attorney has recommended refunding tenants because the lease was not sufficiently clear.  The legal memorandum says – quote – “the City charged on a monthly basis for some of the services it probably should have been covering out of rent revenues.”

Ultimately council has to approve any change in rental rates.  They decided at Tuesday’s meeting that city staff should prepare several options and present them to Council at a meeting in April.

Read the legal memorandum here, the lease here and tenant's petition here.