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REDWOOD CITY FAIR AND AFFORDABLE HOUSING ORDINANCE <br /> <br />Economic & Planning Systems, Inc. 20 Tenant Protection Impacts <br />Elimination of Ratio Utility Billing System (RUBS) <br />Ratio Utility Billing Systems (RUBS) is a method many landlords use to divide <br />shared utility costs (like water, trash, energy, and sewer) among tenants in <br />buildings that lack individual unit meters. The proposed Ordinance prohibits use <br />of RUBS or other utility allocation methods, in all rent-controlled units. <br />Consequently, owners of master-metered properties may be required to at least <br />temporarily absorb costs that are currently paid by tenants. <br />The elimination of RUBS is most likely to affect older apartment buildings, <br />naturally occurring affordable housing, and smaller multifamily buildings that are <br />rent-controlled and not designed with individual utility meters or submeters. <br />Moreover, the cost of separately metering existing buildings is often cost <br />prohibitive, especially for utilities like water and gas. <br />EPS was unable to obtain data on the proportion of Redwood City rental units <br />that currently utilize RUBS. However, property owners / managers interviewed <br />for this indicated that the practice represents the norm, especially for older units, <br />and usually covers water, sewer, and garbage. They also reported that separate <br />metering is physically impractical for water and sewer because it would require <br />costly retrofitting of building systems. For garbage, most multi-family buildings <br />lack adequate space for separate bins for each unit. <br />The elimination of RUBS for rent controlled units creates both financial and <br />behavioral concerns. Owners may face higher and less controllable operating <br />costs, while tenants may have less incentive to conserve water, gas, or electricity <br />if the cost is embedded in rent rather than separately billed. Stakeholders <br />indicated that utility usage may increase when tenants no longer receive a direct <br />cost signal, which could affect property operating expenses, conservation goals, <br />replacement reserves, and long-term affordability. <br />These concerns are supported by a 2024 national study by Fannie Mae on energy <br />consumption trends of multifamily billing structures. It found that at properties <br />that use RUBS formulas, property-level energy or water saving measures often <br />achieve cost savings that accrue to both owners and tenants. Because the RUBS <br />formula allocates a set percentage of the building’s total master-metered utility <br />bill to residents, any property-wide reduction in consumption automatically <br />shrinks the grand total, lowering utility bills for every resident.17 The report found <br />that even when upgrades are limited to a handful of units or common areas, all <br />tenants benefit. <br />The Fannie Mae findings support a 2025 survey prepared for the California <br />Apartment Association of about 4,000 San Jose apartment units affected by the <br />City’s prohibition on RUBS. The survey found that median water usage increased <br /> <br />17 Fannie Mae Multifamily, Benefitting from Efficiency Measures: How Multifamily Utility Billing Structures Impact Cost Savings (2024), <br /> p. 4. <br />8.A. - Page 79 of 168 <br />89