Glenn Barnes is senior project director with the Environmental Finance Center based at the University of North Carolina at Chapel Hill. He is the co-director of the Smart Management for Small Water Systems Project.
For the past year, the Environmental Finance Center at UNC has partnered with its sister Environmental Finance Centers around the country on the Smart Management for Small Water Systems project—an EPA-funded effort to provide training and technical assistance to drinking water systems nationally that serve 10,000 or fewer customers. Of the more than 50,000 community water systems in the United States (those that provide drinking water to people where they live), about 91 percent of them serve 10,000 or fewer customers, according to SDWIS data.
Many of these community water systems are operated by local governments. But a sizable percentage of the systems are operated by non-governmental entities such as homeowner associations and mobile home parks. All small systems face challenges, from dis-economies of scale when keeping up with capital needs and regulatory compliance to issues retaining qualified operators. When providing water service is not the water system’s primary business, however, the challenges are greater.
Back in April, we hosted a workshop on drinking water finance for systems operated by mobile home parks. Mobile home parks in many respects are like mini-towns. They provide places for people to live, roads, public spaces, security, and utilities such as water service. In many cases, they have a residential population that is largely lower income and/or aging.
Those mobile home parks that provide water service often roll that cost directly into the monthly rent charged to the residents, though some have a separate monthly charge for water. Water use is typically unmetered or at least not billed on a per-gallon basis.
When these systems have to raise revenues to pay for needed capital improvements or for regulatory compliance, they have two options. The first is to increase the rents for their limited number of residents, though many mobile home park operators expressed concern about affordability issues or simply losing residents if monthly charges go up. The second is to dip into the overall profits of the mobile home park to pay for needed upgrades. As one mobile home park operator put it, if he has a significant water system bill, he eats Spam for a year instead of steak.
Adding to the challenges that mobile home parks face is that they are often not eligible for funding under state and federal programs because they are classified as for-profit entities, regardless of their actual financial success.
How can mobile home parks and other similar water systems be more successful financially? The first step is for the mobile home parks to understand the cost of operating the water system itself separate from the costs of the overall venture. This will help mobile home parks better charge their residents appropriately for water usage and make their water systems better understood by funders. The Environmental Finance Centers have developed a spreadsheet tool to help systems better understand their finances, and EPA’s STEP Guide Series also has a rates and budgeting guide. Charging separately for water would allow residents to be more aware of the water system and perhaps would allow residents to apply for assistance more easily from social safety net programs. Mobile home parks may also want to explore the possibility of billing for actual usage or at least charging a surcharge for residents that use water for outside irrigation or trailer washing.
Second, mobile home parks should look for ways to reduce costs. One key strategy is asset management—understanding the age and condition of the key capital components of the water system (the well, pump, storage tank, and pipes) and planning for their repair and replacement. This will allow systems to minimize maintenance costs and extend the useful life of the assets. Another key strategy is to look for opportunities to purchase chemicals or laboratory services in bulk with other water systems to reduce the overall per-unit cost.
Finally, mobile home parks may want to find an opportunity to get out of the water business altogether, by selling their assets to another water system if they can find one willing to acquire the system.
These steps should make managing a water system a little easier financially for mobile home parks.