Investor Resources

How to Implement a Ratio Utility Billing System (RUBS) thumbnail

How to Implement a Ratio Utility Billing System (RUBS)

Ratio Utility Billing System, or RUBS, is a great option for property owners to help manage their expenses by proportionately sharing utility costs with their residents in a fair and reasonable manner. An added benefit is that because residents take on the financial responsibility for their usage, they tend to conserve more and help California protect its natural resources.

RUBS typically proportionately divides water, sewer/wastewater or trash, electricity, gas, or pest control utility costs among residents. It uses a formula based on several factors including state and municipality regulations, size of units and the number of occupants in each unit.

The good news is that as a property owner, you will not have to complete the required due diligence. Typically, the property management firm partners with a third-party provider like Yardi, Community Billing Services, or others, to take on the research and determine a fair and legally compliant RUBS formula for their client.

Because RUBS will impact resident monthly costs, it is imperative that your property management firm uses best practices to determine the most appropriate formula for the property and communicates the system clearly.

Here’s Beach Front Property Management’s step by step implementation process:

  1. Complete a property analysis to determine the need and goal of the proposed RUBS program
  2. If RUBS is a viable option, create the appropriate formula for the property
  3. Post a 30-day notice to change rental agreement form and follow up with phone calls to each resident explaining the new policy, the rationale behind it, and how utility costs will be allocated
    • Tip: Ensure the communication is clear and easy to understand
  4. Upload building, unit and resident information to the property’s billing system and verify accuracy by the property management staff
    • Tip: Make sure resident information is up to date to keep track of changes for each unit, such as the addition of a person, because this could impact their utility costs due to increased consumption
  5. Obtain recent master utility bills, analyze for accuracy, and add to the new billing system
  6. Once the proper notification time has elapsed for current residents or as new residents move in, create individual utility bills on a monthly basis
  7. Send utility bills directly to residents

While most transitions to RUBS go smoothly, it is important that property management staff are trained to understand thoroughly the formula, have the ability to answer questions, and resolve any issues. In addition, staff should be prepared to respond to residents reporting neighbors who may be overusing utilities which could impact costs for everyone in their building.

Rent control legislation makes it more important than ever for property owners to manage their expenses. The recovered revenue from RUBS makes it affordable to maintain properties and fund needed renovations that help retain property value and ensure a great environment for residents.

Remember that by keeping your residents in the loop with consistent communication, they will clearly understand how programs like RUBS in the long run benefit them, the property and our environment.