Yes, this is a long article. But it’s important.
Colorado Springs Utilities, and its unfair rental pricing policies, hurts the most vulnerable in our community. And they are raking in enough profits to hand out big raises —$16 million in raises to be exact— to employees.
Is it residential or commercial?
Last month, reader Ethan contacted us about his utility bill. Ethan is a working-class Colorado Springs resident who is renting a tiny, studio apartment near East Boulder and Platte. He describes it as a “hole in the wall.” We looked up pictures and we agree —it’s a pretty small space.
Ethan had two concerns: First, he is facing a very high $200 utility bill following the recent utility rate hikes. Second, he observed that his gas and electric bills are taxed for state, county, city, and PPRTA taxes.
Ethan explained that his apartment is on a shared meter for Colorado Springs Utilities. The utility bill is split between multiple units. His landlord collects rent each month and evenly splits the monthly utility bills between Ethan and the other renters. According to El Paso County records, the property is taxed at a residential rate of 7.14%. That means El Paso County considers it a residential property —not a commercial property.
Colorado Springs Utilities (CSU), on the other hand, considers multi-family dwellings where more than one dwelling unit is served through a shared meter as a “Commercial User.” What does that mean for renters? Renters will pay commercial rates for the utilities when more than 1 dwelling unit is attached to the utility meter.
Here are the definitions of the two types of utility users as defined by Colorado Springs City Code 12.1.101:
Commercial User: Any person whose use of the utility supply system is in connection with the operation of a business, trade or occupation, whether or not for profit, or any other non- single-family residential purpose. The persons shall include but shall not be limited to homeowners’ associations, clubs, fraternities, sororities, lodges, hotels, apartment and rooming houses, tourist camps and cottages, multi-family dwellings where more than one dwelling unit is served through one meter, all common areas of multi-family dwellings when separately metered, schools, military facilities, industrial facilities, governmental buildings and churches.
Residential User: Any person whose use of the utility supply system is exclusively for domestic purposes in a private home or individual dwelling unit where not more than one dwelling unit is served through one meter. Each person of full legal age who resides at the premises shall be deemed to have received benefit of utility services supplied and shall be liable to Utilities for payment, whether or not service is listed in that person’s name.
In the Colorado Springs City Code 12.1.108, it states that all rates, as established by City Council for electric, streetlight, and natural gas service, shall be, “just, reasonable, sufficient and not unduly discriminatory. “
Is CSU and the City of Colorado Springs discriminating against renters? It looks like it to us.
Are utilities taxed?
When rental properties are designated as commercial users, the renters are taxed for gas and electric usage. We’re not talking about them being taxed for buying something at the mall. We’re talking about renters —including the most vulnerable in our community— who are trying to stay warm in their homes, having to pay taxes to several levels of government, for something that is essential.
How are increased rates affecting renters?
Electricity and gas rates for residential and commercial are the same until usage exceeds a certain threshold. Then, the price spikes noticeably. The difference between commercial and residential water rates is also quite noticeable.
Rents in Colorado Springs are at historic highs. Utility prices have increased. If families can’t afford rent and utilities, they may end up homeless. Taxpayers also end up paying to deal with homelessness. Taxpayers also fund the LEAP Programthat assists those who can’t afford to pay for utilities. Government creates the problem by burdening the most vulnerable, then expects the taxpayers to pay for the “fix.”
Why are there different utility rates for renters vs. homeowners?
We wondered if the higher rates for renters was something being ordered by the State of Colorado.
We contacted Cindy Schonhaut, Director of the Office of the Utility Consumer Advocate Department. Ms. Schonhaut told us that CSU determines its own billing practices —not state regulators. As a municipally-owned utility, pursuant to state law, CSU is not regulated by the Colorado Public Utilities Commission. That means these billing practices are determined by the utility, not state regulators. Ms. Schonhaut encouraged us to seek information from CSU.
We contacted the Colorado Springs City Council members, as they serve a dual role as the board of CSU. City Council President Tom Strand kindly connected us with CSU Senior Affairs Specialist Steve Berry. We emailed Berry the following:
It was recently brought to my attention that renters in Colorado Springs who live in residences with shared meters are paying commercial rates on utilities and their gas and electric are taxed for city, state, county, and PPRTA taxes. The county taxes these properties at residential rates, so I do not understand the grounds for charging them commercial rates and taxing the essential utilities. If you would like to comment or refer me to someone who can explain the practice, I’d appreciate it.
Here is Berry’s response on behalf of CSU:
Master Meters are considered commercial based on the city code definitions for Utilities. As Colorado Springs Utilities is required to collect sales tax on commercial accounts as a pass through to the taxing authority (state, city, etc.), Master Meters are billed taxes for electric and gas service.
Typically, Master Meter accounts are set up in the name of the Landlord or Property Management company and in many instances those companies pass along the bill costs to their tenant; this would be spelled out in the rental agreement between the landlord and tenant. We are not billing residential customers taxes, but rather it is being passed along to the tenants from their Landlord or Property Manager.
This information is covered in the Utilities Rules and Regulations, Sheet 48 of the URR (G.1 and G.2):
Metering arrangements, agreements and allocation procedures used by Master Metered Customers to obtain reimbursement of the Master Metered bill are determined solely by contractual arrangement between the Master Metered Customer and the persons to whom the service is distributed. The resolution of disputes between the Master Metered Customer and tenants, lessees or other persons to whom the service is distributed is not the responsibility of Utilities.
Well, that rang hollow.
Here’s how we read the response: The city code dictates the rates on renters versus owners. But CSU has clearly been aware of it. Had they thought the rate differential was unfair, they could have addressed the city code. Don’t forget, the city council members are also the CSU board. This response makes it very clear: The renters aren’t CSU customers —the landlords are.
CSU’s motto is, “It’s how we’re all connected.” Maybe that needs to be amended to say, “It’s how we’re all connected…unless you’re a renter.”
Who are the renters? Let’s connect the dots.
Renters are statistically the most financially vulnerable among us. The majority of renters are under 35-years old. They earn less than homeowners. Most rent because they have to —not because they want to.
The City of Colorado Springs has openly courted millennials on many occasions. Former City Councilwoman Jill Gaebler flatly told us, during the 2019 Battle of the Bike Lanes forum, that we need more of the 35 and younger folks to move to our community. She told us that those younger folks would use the empty bike lanes.
Gaebler even went so far as to speak for Mayor John Suthers and tell us he didn’t care if older folks move here. Suthers has repeatedly said that we need more millennials to move to Colorado Springs. Colorado Springs currently leads the nation in the rate of millennials moving to our community. A recent article shared on the City of Colorado Springs website says Colorado Springs ranks in the top-10 places to live for college graduates. Those in local government are actively encouraging renters to move here even though it’s no longer an affordable place to live.
Affordable housing is taxpayer-subsidized housing and we’ve seen a big push for it over the past several years. It’s another example of government actively creating a problem of too many renters moving to Colorado Springs and then, using taxpayer money to fund the “solution” once rents spike.
Sales tax revenue for utilities jumped 38.7% in December. That was the month following CSU’s big rate hikes. Is it safe to assume that the rate increase and the tax revenue increase are correlated? We believe so.
How many neighborhoods have recently opposed zoning changes for massive apartment complexes being built in their neighborhoods? Too many to count. Does the revenue generated from the taxed utilities give the developers a leg up against neighborhood opposition when the two opposing parties appear before city council to make their arguments for or against the development? It’s a reasonable question.
Contact the CSU board members —the same people who are elected to city council— and ask them why the practices of charging renters commercial utility rates and taxing their utilities is allowed to continue. Ask them for a solution —a city code change. Charging renters higher rates, then taxing those renters at that higher rate, is an unfair practice, and it creates bigger problems for the entire city down the road.
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