Water Rate-Hikes for Rentals

seapal0712For a while now, members have been asking about a rumored water rate-hike for people who rent out their homes, so we tracked down a high level SEAPAL executive for the definitive answer.  The utility confirms that it’s beginning an effort to ID private individuals who rent out their homes or condos…and to change their water contracts from ‘private’ to ‘commercial’ – effectively raising, maybe as much as doubling, their current rates.  And if you live in a building with a single ‘community’ water contract, this could affect you, whether you rent out your unit, or not.

SEAPAL has one contract rate for ‘commercial’ users, and a different, lower rate, for ‘residential’ users.  They say that if you rent out your property for short periods (in their words, ‘like a hotel’), you’re engaged in commercial activity, and should be charged accordingly – at the higher rate. So SEAPAL is going online, looking for rentals advertised in the Puerto Vallarta area, and ‘flagging’ them as possible violations of residential contract terms.  Inspectors then examine actual water usage, and SEAPAL may decide to turn that residential contract into a commercial one.

Residential water contracts are billed at the lower rate, every two months, while commercial users are billed monthly (twice as often), and at the higher rate, which is roughly double the residential rate.

SEAPAL’s theory is, if you rent out your unit, you’re not only engaged in ‘commercial’ activity, but your tenants are potentially using more water than you would, or if the property was vacant.  This additional usage, the theory goes, creates usage ‘spikes’ (which can be compared against your ‘regular’ water use) which, multiplied by who knows how many other ‘undeclared’ rental properties, increases peak water usage, forcing SEAPAL to keep pace, which leads to increased costs for the utility…which should be paid for by those responsible – those who rent out their private properties.

Since many residential buildings have a single water contract, the rental activity of a single unit could potentially trigger a water contract change for the entire building – so, whether you rent out your unit or not, you might be at risk for a big rate-increase.

Individual owners and HOA’s should consider the risk, and act accordingly.