RUBS

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RUBS is an acronym that stands for Ratio Utility Billing System. This is a mathematical formula used for the allocation of utility expenses to renters by apartment owners who cannot install individual utility submeters.

As of 2006, RUBS is legal in most parts of the United States. Exceptions include the states of North Carolina and Massachusetts, as well as the city of Cleveland, Ohio and Miami-Dade County, Florida. States such as Texas and Minnesota regulate RUBS billing. Most other parts of the country explicitly allow RUBS (such as Oklahoma and Illinois) or do not specifically address the practice in any legislation.

Common ways to use a RUBS formula for the allocation of utility costs include using each unit's occupant count to determine that unit's proportionate share of the property's master water/sewer bill; or the unit's square footage as a percentage of all rentable square footage to determine that unit's proportionate share of energy expense. Some owners may combine these two methods, basing half of the calculation on a unit's occupant count and half the calculation on the unit's size.

Although it is viewed as being less fair than the use of utility submeters to measure actual utility usage, RUBS billing is tied to the property's actual utility costs, so there is an incentive for renters to use their utilities more responsibly. Studies conducted by the National Apartment Association and the National Multifamily Housing Council suggest that apartment communities using a RUBS program see a reduction in utility usage over time of as much as 25%. Because apartment renters whose utilities are included with rent are considered among the worst abusers of natural resources, such programs should appeal to communities wishing to encourage utility conservation.

RUBS billing is appealing to property owners who cannot raise rents fast enough to keep up with spiraling utilities costs. Many renters are naturally opposed to this method of allocating costs, preferring to keep utilities included as part of general rent, or to have individual meters installed. Unfortunately there are many older apartment communities that cannot be individually submetered due to configuration of water, gas or electric supply lines.

Most property owners use commercial third parties to administer these types of programs, while some prefer to do it themselves.