What is a Ratio Utility Billing System? (RUBS)
Simply put, RUBS divides utility bills among residents of a property based on predetermined criteria. A cost-effective solution for property owners to recoup expenditures while also proportionately sharing conservation responsibility with residents in a fair and acceptable manner. Beyond the financial benefits, conserving the Earth's natural resources is in our collective interest.
RUBS offers an alternative option when submetering is too expensive or cumbersome to install. According to Commercial Property Executive submeters including installation typically cost $1,500 to $2,000 per apartment.
How is RUBS Calculated?
RUBS calculates the utility consumption of a unit based on occupancy and usage. Since not all utilities are consumed in equal quantity or amount, the type of utility also plays a role in determining the property-specific RUBS formula. The Livable legal team conducts research on their client’s behalf to determine a fair and legally compliant RUBS formula.
Water and Sewer
The majority of RUBS formulas allocate water and sewer based on the number of people living in each unit. It is fair to conclude that two people will use more water than one, or a single person occupying a one-bedroom unit will use less water than two people living in a one-bedroom unit.
RUBS formulas also consider variables such as the number of water fixtures in a unit, or if an infant is living in the unit and can manage the share of bills accordingly. It is fundamental for the RUBS service provider, with assistance from the property manager, to keep track of resident data to ensure that the formula remains accurate—and fair.
Gas & Electricity
When individual units don’t have a gas or electric meter, a standard method is to calculate costs based on the unit’s square footage. It is logical to say- the larger the apartment, the more the gas or electricity required to heat or cool the space.
However, before executing this formula, consider each unit’s design. A larger apartment does not necessarily mean it has more residents or appliances than a smaller unit. In other words, RUBS formulas are not one-size-fits-all, and each property requires consideration of individual factors.
Common Areas
Most Ratio Utility Billing formulas account for multifamily utility areas available to all residents, such as green space, pest control, workout areas, or a clubhouse. Typically, the formula features a 20/80 split in which the owner pays 20% of the bill for common area utility costs. While no formula is perfectly fair, allocating 20% of the cost to the property owner is a reasonable compromise.
The Benefits
- Quick implementation
- Returns on utility expenses
- Increase in cash flow
- Encouragement to conserve utilities
Tenants are more likely to effectively manage their utility consumption when utility prices are billed directly. Reducing utility usage isn't top-of-mind if residents don’t see a utility bill. Property owners will see behavior changes in their tenants and overall usage reduces after they check utility bills on their monthly rent statement. A study conducted by the National Multi-Housing Council and the National Apartment Association found that properties that use a RUBS allocation formula to distribute water costs reduced 6- 27% in water usage.
Introducing Ratio Billing to Residents
A practical approach is to post a 30-day notice to change the billing method for utilities. Also, follow up with phone calls to each resident 15 days before implementing RUBS to explain the new policy, its rationale, and how utility costs will be allocated - all in all, be sure communication is clear and timely.
Informed residents rarely object to implementing RUBS, especially when it is explained how they and their neighbors might save money on utilities by using these commodities more carefully. It's tough to argue against the idea that the individual who uses the services should cover some costs. Residents should be able to easily report neighbors who blatantly abuse utilities so that the behavior can be corrected and everyone's costs are reduced.
Through several platforms Livable aims to reduce consumption while adding to your bottom line. Book a call with a Livable professional today and join the thousands of people conserving the Earth’s natural resources.
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