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Raleigh student housing complex cited for illegal utility charges

dbracken@newsobserver.comJuly 12, 2012 

Over the next few weeks tens of thousands of college students will arrive in the Triangle to take up residence in privately-owned student housing complexes.

Many of these complexes lease by the bedroom – and not the unit – in order to make it easier for students to find roommates and divide costs. While this structure provides a great deal of convenience it also requires students and their parents to pay close attention to the various fees they are being charged.

A recent case before the N.C. Utilities Commission is a reminder of why.

When Judy Long’s daughter, Elizabeth, moved into the Campus Crossings apartments off Tryon Road near N.C. State University in the fall of 2009, her lease called for her to pay $30 a month for utilities as part of the rent. If she and her roommates’ electricity bill totaled more than what was included in the rent, they were charged on a pro rata basis for those overages.

Although the structure made Judy Long suspicious – particularly when her daughter and her roommates were charged for overages in December when they were hardly there – the owner of the complex, Philadelphia-based Campus Apartments, told residents the bills were on file if they ever wanted to look at them.

The next school year Campus Crossings residents were informed that a company, Conservice, had been hired to handle the utility billing and that registering with the company cost $45.

“And that just jerked my chain,” said Judy Long, who lives in Greensboro. “I’m not paying somebody to pay my bills to them. I’m just not doing it.”

Long called the Utilities Commission and complained, which led the Public Staff, the state’s consumer protection agency in utility matters, to launch an investigation into the billing practices at Campus Crossing.

Long’s suspicions were confirmed last month, when the Utilities Commission ruled that Campus Crossings’ owner was illegally operating as a public utility. The commission ordered the company to refund tenants that were unfairly charged for utilities and to halt such practices at all its properties in North Carolina.

Complaints are rare

Campus Apartments, one of the nation’s largest owners and managers of student housing, also operates the Campus Crossings complex in Durham, The Warehouse student housing complex in Chapel Hill and the University Suites complex in Greenville.

Campus Apartments declined to comment on the case, saying it cannot comment on matters that are currently in litigation. The company sought to have the case against it dismissed, arguing in its filings with the Utilities Commission that “the utility bill allocation practice in use at Campus Crossing ... is widely used in the student housing industry today.”

Any apartment building constructed after September 1977 is required to have utilities be in the name of the tenant – a provision that was adopted to encourage conservation. North Carolina’s statute has an exception for dormitories, and student housing complexes that qualify for the exception can include utilities as part of their rent.

Complaints such as the one filed by Long appear to be rare among student housing complexes, as members of the Public Staff and the Utilities Commission could not recall a similar case.

But the commission found that Campus Crossings didn’t qualify for the dormitory exception and that it was illegally acting as a reseller of electricity by varying the monthly bill it charged tenants based on usage.

The Public Staff’s investigation also found that while Campus Crossings was charging tenants for any overages they incurred, it was not refunding them if a tenant’s pro rata share was less than the $30 a month.

New law changes rules

In fighting the complaint, Campus Apartments went so far as to successfully lobby the General Assembly to add a provision to state law allowing apartment complexes to register as electricity resellers. That law went into effect in October, though neither Campus Crossings nor any other apartment complex has been approved as registered resellers.

The state already had a provision allowing such complexes to register as water resellers, which allows them to pass through costs to their tenants as well as a set administrative fee.

But the Utilities Commission found that Campus Crossings was not billing for water as it was allowed to, in addition to illegally reselling electricity. The commission also ruled that Campus Crossings $45 administrative fee by Conservice was illegal and subject to refund.

Elizabeth Long, who graduated from NCSU this spring, is Judy Long’s third and last child to attend college. Judy Long said her experience dealing with other student housing developments likely helped her sense that something was amiss.

While the Longs paid for Elizabeth’s housing costs at NCSU, Judy Long said many of her daughter’s friends were paying those costs out of their own pocket.

“These kids are struggling to stay at school, and this company is taking advantage of them,” she said.

Although it took a while, Judy Long is happy that her complaint ultimately led to the exposure of the company’s practices. She’s yet to receive a refund.

“It’ll be interesting to see if we ever see the money from it,” Long said.

Bracken: 919-829-4548

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