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Jun 02
2011
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By Salvatore J. Friscia, San Diego Premier Property Management, San Diego, CA If you own multi-family rental property in the southwestern United States you should know about RUBS (Ratio Utility Billing System). A large majority of multi-family rental properties in California, Arizona, Nevada, and New The RUBS (Ratio Utility Billing System) uses an allocation formula that divides a property’s water bill among its residents based on square footage, number of occupants, or some other quantitative measure. It allows the owner to recover a substantial portion of the water and sewer cost by proportionately allocating the costs amongst the tenants. To implement RUBS it is recommended that an owner give monthly notices for at least 6 months to all tenants about the new program. This will give adequate time for the tenants to absorb the changes and understand the new cost associated with the billing. Studies have shown that the loss of tenants will be minimal and the cost associated with the savings from the program will outweigh any short-term vacancy bumps. The owner then takes a percentage (typically 10% to 20%) from the total water bill for common area usage and allocates the remaining amount to the tenants. Some owners gradually increase the percentage for which tenants are responsible to ease tenants into the program over a yearly time frame. The RUBS program is a useful tool that eliminates the outlay of capital and the high cost associated with sub-metering. When implemented correctly the program will reduce operating expenses and increase the overall value of your property.
Mexico are individually metered for electric but have what’s called a “master” meter for water. The electric usage of the tenant is paid for by the tenant and the water and sewer usage for the entire complex is typically at the owner’s expense. This expense can be rather costly and eats into the NOI (net operating Income) of the property producing a negative effect on the value of the asset. Most industry experts foresee prolonged price increases for water consumption as the areas mentioned above are currently dealing with drought and long-term water conservation concerns. To mitigate this expense savvy investors have typically reduced water consumption by the installation of low flow toilets, low flow shower heads, and landscaping of indigenous plants or desert landscaping in common areas. While this helps reduce cost it doesn’t eliminate it and the owner is still burdened with an expense that continues to outpace reduction methods. Some owners have gone as far as installing sub-metering on each individual unit if the property’s current piping system allows it. This would seem to be the best solution but once again this is only feasible if the properties current piping system will allow you to make these changes. All of these methods are helpful and will curve water consumption and the cost associated with it but unfortunately all of these methods also require an initial capital investment by the owner to implement. Depending on the size of your property, this initial capital expense could be significant — sub-meters can cost anywhere from $200-$400 per unit not including installation fees.
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Many properties can't be metered absent a point of use system (which is not allowed in CA). The alternative is in-rent billing which has absolutely no incentive to conserve and in fact has an incentive to use as much as possible.
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While we do see the biggest change in consumption at a property with submetering systems installed, a decrease can also be seen when a RUBS program is used. Educating your residents on ways to save water is key.
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I am going to look into the RUBS program but my assumption is that in the end the owner is still responsible for the bill so once the tenant finds that out they can use that to their advantage and may or may not pay their portion.
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Our company would be happy to give you a quote. You can call Scott Springs, Regional Sales Manager for Minol at 866-906-4665. California does have pretty strict regulatory guidelines, so that may make it a bit more expensive, but $3k to $4k seems outrageous. There are specific meter types that must be used and they have to go through California Weights and Measures for inspection prior to installation.
Just a note, even with submeters, the owner still pays the utility directly and the residents reimburse the owner for the expense after the fact. Landlord/Tenant law and your lease will dictate what measures you can take to ensure your residents pay for their share of the expense.
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I agree with Kathy, $3-$4K is very high for a nine unit complex unless there was extensive plumbing work that needed to be done in order to add the meters to the property. I just finished a submetering job for complex in San Diego and it was more along the lines of $300 to $400 per unit.
In regards to RUBS we have seen great success with implementing it at the properties we work with. The key is to maintain open communication with tenants so they are involved in all aspects of the conservation efforts. We have an office in Southern California. Feel free to give us a call if you need additional information. We would be more than happy to take a look at your property and talk about different options for you and your tenants. Multifamily Utility Company 800.266.0968
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Additionally, (water) submetering systems can often be purchased for around $200-$400 per unit INSTALLED. Size & location of community, existing plumbing configuration and the equipment proposed are the key factors that determine price.