Money Down The Drain

http://tampabay.bizjournals.com/tampabay/stories/2004/05/31/focus1.html

   ST. PETERSBURG -- Dan Helton likes to tell a story that involves an
   apartment renter who would run her shower all night long because the
   sound helped her sleep. Helton says this type of behavior has helped him
   build a multi-million dollar business.

   Helton is the president of Southern Water Management Inc., which
   utilizes sub-metering utility technology to measure the amount of water
   each individual renter uses in his or her apartment. The company then
   bills the residents, collects the fees, pays the apartment management
   for the water usage and keeps a portion of the collections as a service
   charge.

   With sub-metering, a resident's utility bill is based on actual metered
   consumption. It comes from a third-party service provider not the
   landlord.

   Residents lower their bill by doing things such as taking shorter
   showers and reporting leaky faucets. They feel more in control and
   responsible for their own bills, Helton said.

   By billing each resident for only the actual water usage, sub-metering
   allows the apartments to delay or lower rent increases, promotes water
   conservation, and most importantly, said Helton, saves the landlord
   money.

   "We can show that on average, apartment communities use 25-percent to
   30-percent less water after we install the meters," he said.

   Since the water charges aren't built into the rent, residents are more
   aware of usage and more quickly report leaks and other problems, Helton
   said.

   Helton started his company in 1994 with a partner, Don Stevens. After
   reviewing financing for two similar apartment communities, one with
   sub-metering and one without, Helton noticed that the sub-metered unit
   performed more profitably than the other.

   From his background as a financial analyst, he developed a computer
   program that customizes reports for the apartment investors and
   managers.

   Ten years later, the company has clients in four states and grosses more
   than $1 million per year.

   And as far as his local clients, they have gotten "smaller."

   "Locally, the last year I have seen my biggest growth come from smaller
   complex owners -- landlords who own anywhere from 50 to 100 units," said
   Helton. "For these people, we have been able to save them as much as 50
   percent on their monthly utility bills. In most cases, that number has
   been abouts 35 (percent)."

   Randy Hendricks, president of Hendricks Enterprises in South Pasadena,
   owns about 600 rental units throughout the Tampa Bay area. His
   properties range from, on average, 25 to 100 units per community.

   Hendricks began sub-metering his properties a few years ago and plans to
   convert all his properties by the end of 2005. He said he realized his
   savings immediately.

   "The moment those meters were put in, the overall water bill dropped by
   32 percent within the first month," said Hendricks. "As soon as you tell
   the renters they're paying for it, they quit wasting it."

   Hendricks said not only is the sub-metering system valuable for him as a
   landlord, it's valuable to the state as a whole.

   "We're now finding that people call us a lot more if there's a leaky
   faucet or their toilet is running," Hendricks said. "They're conserving
   whereas before, when they weren't paying for each drop, they'd be more
   likely to ignore the problem."

   Hendricks said he has one renter that takes "thriftiness" to a whole new
   level.

   "I have one guy who takes a shower and fills a five gallon bucket to
   catch the cool water while it (the shower) is warming up," Hendricks
   said. "He then uses that water to flush his toilet."

   According to a report by Environmental Protection Agency Administrator
   Christie Whitman, a typical U.S. family of four spends around $820 every
   year on water and sewer fees, plus another $230 in energy charges for
   heating water.

   A study conducted by Industrial Economics Inc. for the National
   Apartment Association and the National Multi-Housing Council showed that
   only about 2 million of the country's approximately 35 million rental
   households pay a separate bill for their water.

   However, the study showed that apartments that did charge for water
   consumption found an immediate 18- to 39-percent decrease in water
   usage.

   While some apartment communities try to provide the metering service
   in-house, this generally doesn't work as well as using an outside
   metering company, Helton said.

   "The residents feel double-dipped, paying rent and then for water on top
   of that," he said. "They don't resent paying us because we're not
   connected with the property."

   Because water is regulated based on the municipality in which it
   resides, Helton must stay on top of local, state and national
   regulations that pertain to each property.

   "In St. Petersburg alone, we probably have 10 different rate schedules.
   It really depends on how the municipalities set it up," said Helton.



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