While the effects of water metering will be felt by Thompson homeowners immediately once the plan takes effect on Jan. 1, there will likely be some lag time before high-density apartment dwellers catch up.
That's because of a confluence of factors related to rental housing legislation in the province, and the city's decisions on the water meter process.
The city is only covering the cost of one meter installation per building - which is fine for single-unit homes and businesses, as they can easily monitor their water usage, but poses problems for multi-unit buildings such as apartments. The city meter will only measure the total water usage by the entire building; there is no way to break it up by unit. Landlords are able to install additional meters if they wish, but they would have to finance the meters themselves. Additionally, many buildings were designed in such a way that meters for individual units would be either impractical or impossible - the same pipes leading to multiple apartments, for example, without a shutoff valve for just one individual unit.
Therefore, as individual units cannot practically have their water usage monitored, landlords will likely pass the cost of their water bills on to their tenants in one of two ways - either by billing every unit equally, or by billing every unit based on the number of inhabitants or bedrooms, under the assumption that an apartment with more inhabitants will use more water than an apartment with fewer inhabitants.
However, while the landlords will be charged for their water usage effective Jan. 1, they won't be able to pass that cost on to their renters right away. This is because, under the provincial Residential Tenancies Act, rents can only be raised once every year. "At this point, Residential Tenancies expects us to pay for all the tenants' water for one year and then apply a rent increase above the guidelines to compensate," explained Katherine McCallum of Mihkan Holdings. The Residential Tenancies Branch (RTB), which oversees the Residential Tenancies Act, sets out a flat rate increase for the entire province - for 2010 it was one per cent, but from 2006 to 2009, it ranged from two per cent to 2.5 per cent.
Landlords can raise their rental rates by whatever amount they want, even if it's above the guideline, but tenants are able to appeal any rate increase (provided they do so within 30 days of being notified of the increase). During the appeal, the landlord must show that the increase was necessary based on costs that have already been incurred - not costs that will be incurred in the future, such as future construction plans or costs created by a new water utility. Thompson landlords won't be able to raise their rental rates to reflect the full rise in expenses caused by water metering until after the meters have already been in service for an entire year. "We would never get that one year of water costs back," said McCallum.
These guidelines do not apply to properties managed by government agencies, employee housing, properties built since 2001, or units renting for over $1,105 per month. In these cases, rent can be raised by whatever the landlord wishes - though tenants retain the right to appeal any increase they believe to be unfair.
At a July 28 information session for landlords held by the city, landlords were told that the average Thompson home might see water costs of $80 per month - though the rates have yet to be finalized, a process which is expected to be completed and presented to the public at a meeting in early September. After that, the Thompson water utility must argue its case in front of the Manitoba Public Utilities Board (PUB), which oversees all utilities across the province. City manager Randy Patrick expects the rates to be finalized through the PUB by the end of November.
For landlords, that could mean taking a hit of $80 per unit per month for an entire year - and for Thompson's biggest landlords, who own dozens or hundreds of units, the total cost draws closer and closer to six figures. "With 100 suites," says McCallum, "that would be $96,000 in one year that we have not budgeted for, nor would it increase the value of the property."
For the moment, while it appears that rental rates will have to go up to offset the rise in costs brought on by water meters, those renting their accommodations in Thompson will see a bit of a delay compared to the cost homeowners will pay immediately beginning in January - barring any major action by the RTB, the full force of the water cost won't be felt by renters until 2012.
