A Kingwood apartment complex is in hot water following a recent ruling made by the Public Utility Commission of Texas alleging property managers illegally overcharged its tenants potentially millions of dollars in utilities over the course of more than a decade.
The commission determined in April that the Kingwood Lakes apartment complex, managed by Adara Communities, likely overcharged tenants for water and wastewater services from 2003 until 2016 by means of a non-allocated, flat-rate system attached to lease agreements in contravention of state law. The apartment complex had allegedly been charging residents a flat rate fee of $47 to $54 per month for water and wastewater services.
“An apartment owner is required to register with the commission to indicate whether it bills by means of sub-metering or an allocation formula, and if using an allocation formula, which allocation formula the apartment owner has chosen,” said Fred Bednarski, PUC financial review specialist. “It was determined that Lake Kylasam, Kingwood Lake’s current owner, never registered with the commission prior to the bringing of the complaint.”
The commission ordered the owners of Kingwood Lakes to provide a list detailing every tenant that has ever been charged with a flat-rate fee for water or wastewater services by July 24 in order to refund all affected current and former residents.
“I lived at Kingwood Lakes for about five years and all my neighbors complained about how terrible the management was,” said Casey Woodard, a former resident. “The entire time I lived there I knew there was something wrong with the way they were charging me for utilities in my lease, but rent was cheap so I didn’t mind.”
The issue was brought to light after the commission partly ruled in favor of one former resident, Melanie Bittone, who filed a string of complaints against Kingwood Lakes in December of 2015. Bittone alleged that management at Kingwood Lakes illegally overcharged her for utilities and then acted in retaliation against her when she refused to sign a non-disclosure agreement upon requesting to review the leasing office’s books.
“Kingwood Lakes is master-metered for water, and wastewater utility service and billing is therefore performed by the apartment owner, rather than by the utility, the City of Houston. It was determined that Kingwood Lakes charged the complainant, Ms. Bittone, and likely other tenants of Kingwood Lakes for water and wastewater service by means of a non-allocated flat rate,” said Bednarski.
Bednarksi added that Kingwood Lakes is required to calculate and account for all charges to tenants for water or wastewater service and file all information necessary to determine the amounts to be refunded to each tenant and the appropriate time period for refunding tenants.
Under Texas law, it is illegal for a landlord to charge tenants a flat-rate fee for utilities. Furthermore, Texas Water Code §13.505 states that if a landlord violates a rule of the utility commission regarding sub-metering of utility service or master-metered utility costs, tenants may recover three times the amount of any overcharge, a civil penalty equal to one month’s rent, reasonable attorney’s fees and court costs from the owner.
In Bittone’s lawsuit against Kingwood Lakes, she sought reimbursement of $888 for the 19 months she lived at the complex and another $2,664 in treble damages. However, the PUC’s administrative law judge only granted Bittone a refund of $359.77 based solely on overcharges, concluding that such application of Texas Water Code §13.505 would be unprecedented.
“We believe Ms. Bittone has been reimbursed for any possible overbilling and refunded appropriately,” said Kathy Maxie, district manager of Adara Communities. “We do not believe we have violated any of the Commissioner’s Rules. If the commission deems otherwise, we believe we have corrected any violations to move forward in compliance. We do not believe Ms. Bittone has been harmed in any way.”
Bittone filed an appeal to the commission’s ruling and currently is awaiting a hearing in the 353rd District Court in Travis County.
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