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For the third time this year, the Rental Housing Committee grappled with the issue of how to reconcile fluctuating utility costs with the city’s rent stabilization laws.
On Monday evening, they settled on a plan to phase out a controversial billing system that relies on shared or master meters to charge tenants.
At the heart of the decision is a determination that utility fees paid to landlords are considered a part of rent, and subject to limitations in increases under the city’s rent control law, the Community Stabilization and Fair Rent Act (CSFRA). This includes payments to third-party service providers, like Conservice, which landlords often use to allocate utility charges among tenants, in a ratio utility billing system (RUBS).
In the past, this has led to confusion for tenants who do not understand the fluctuating fees, as RUBS is not based on individual usage but instead calculated by other means, like square footage or number of bedrooms in a unit.
The Monday study session clarified that all charges for shared or master-metered utilities, such as water, electricity, sewage and trash, are part of the definition of rent; and the cost of these services need to be established in the rental agreement at the beginning of a tenancy.
Tenants welcomed the transparency of this recommendation, but landlords and housing providers lined up to express their opposition.
“RUBS is key to conservation,” said Anil Babbar, a staff member with the California Apartment Association, who provided a presentation that showed an increase in water usage in apartment buildings after San Jose eliminated RUBS in 2018.
Several other landlords and housing providers expressed similar concerns about water conservation if RUBS was eliminated. They also questioned why the committee was not considering alternatives that could keep RUBS in place.
Regan Avery, who helps run a family real estate business in Mountain View, said he rolled out RUBS in 2014 with a lease addendum that provides a specific cap on utility fees. “I really don’t see how this is in conflict with CSFRA, the way it’s set up and the way we’ve got a cap and not-to-exceed (clause), and we’ve never touched that cap over time,” he said.
The committee considered the idea of the cap, which they discussed in a previous study session as well, and ultimately concluded that it would run into problems with calculating the maximum allowable rent increase – known as the Annual General Adjustment – in subsequent years.
“I think it’s clear that one of our options tonight is to stay on our path of saying no RUBS in Mountain View for CSFRA apartments, said Commissioner Edie Keating.
To bring existing tenancies into CSFRA compliance, staff recommended a one-time rent adjustment based on a property’s previous utility charges. The committee decided on a methodology that would calculate the average utility cost per room, with the idea that the calculation would provide the most accurate and streamlined picture of utility usage.
“I think number-per-room is closer to the actual usage of utilities than just square footage because it is closer to the number of people who are there,” said Commissioner Robert Cox.
Staff recommended adopting a multi-step process to implement the one-time rent adjustment that, with its back-and-forth communications and petitions, will require a substantial amount of time to oversee and likely will result in a temporary or permanent staff hire, according to the city memo.
Staff also recommended that the new regulations, once drafted and approved, go into effect immediately for new tenancies while a staggered timeline, based on property size, be used for existing tenancies, which the commissioners supported.
“Rents for new units will be the official rent in the lease and will include utilities,” Keating said. “Utilities will no longer be billed through RUBS for those apartments as they come into existence,” she added.
Gosh, who could have possibly foreseen that interfering with the market pricing for rentals would have its unintended consequences and ever increasing complexity. Please shut down these counterproductive committees and anti-market acts before it’s too late.
Dan, you need to convince the voters to do that.
But when Measure D was rejected with better than 2 to 1 vote majority, that’s a hard sell.
The CAA paid signature gatherers $250,000 to get their initiative on the Ballot in Nov 2020. But pulled the ballot measure off the ballot.
Who needs to do what here?
It is a sad that the RHC has come to this.
This means they have no credibility.
It means the RHC is owned by a bunch of Activists who will force illogical rules on people
It is pretty obvious that energy costs are not part of rent.
Yet, they will make up rules to tell you something which is not true.
The core issue is a lot of people surprised by energy costs last winter.
Energy pricing has swung wildly due to war/production/political issues/pipeline destruction.
*Some* People have a hard time understanding RUBS
* Some* people were surprised by the wild swings in energy pricing
Yet, The RHC is going out of their way to try to solve the above by:
Saying Energy Pricing is rent
And that nobody can understand RUBs, and therefore they were surprised
While ignoring that RUBs exists because old apartments don’t have individual meters, and RUBS
was the work around for how things were build 50-70s years ago. And their formulas are documented; some people can’t understand the documentation.
And trying a convoluted retroactive pricing formula even more complicated than RUBS
Ya Can’t Make this stuff up
Well, RHC will do what ever they want through force
I’m glad I don’t have a dog is this issue.
My tenants are billed directly by the energy company.
Their bills also fluctuated wildly, and they were surprised.
But my tenants are very good, and smart, and can easily understand the global energy issues
But why can’t the RHC and their constituents understand the global energy issues?
RUBS is a failure. If landlords know for certain how many tenants are staying in each unit for purposes of billing, it becomes a bit more reasonable but ALL of the water bill from the gardeners, sprinklers, washing machines, etc. gets billed to the tenants and divided up. Hardly a fair system. Let the landlord take in the cost and get his write off as well.
JustAWorkingStiff, it’s important to note that if you are a landlord of CSFRA covered units, you may be violating the CSFRA by charging your tenants for utilities or having them pay for the utilities. It’s advisable to review the regulations to ensure compliance with the law.
“(p)Rent. All periodic payments and all nonmonetary consideration including, but not limited to, the fair market value of goods, labor performed or services rendered to or for the benefit of the Landlord under a Rental Housing Agreement concerning the use or occupancy of a Rental Unit and premises and attendant Housing Services, including all payment and consideration demanded or paid for parking, Utility Charges, pets, furniture, and/or subletting.”
It is pretty clear that tenants have accounts directly with energy company.
I am not in the middle and no energy payments flow through me.
Don’t create issues where they don’t exist.
Conducting business ethically and within the law is crucial. It’s essential to ensure compliance with regulations to avoid any potential legal complications. Staying informed about the laws and regulations relevant to your situation can help prevent unintended issues in the future.
“citing environmental concerns”. How does a landlords bottom line affect the environment? This is a disingenuous argument. You all cry foul when the powers to be support renters but are silent when those powers support much larger and powerful organizations. Hypocrites.
Is this rule as wacky as it sounds? If you run up a big energy bill, say by running the A/C too much, or a server for Bitcoin, you don’t pay what you use? How is this climate-friendly?
There is now a bureaucratic rule about one-time adjustments? If tenants are confused about how the energy bill is apportioned (and I really wonder if this isn’t another tempest-in-a-teapot thing), how about you hand them a form with a checkbox that tells them which of the common metrics is used?
Many people predicted this would happen. The rules keep growing and eventually, not just apartments will be subject to the rent control.
This is why landlords get out. They sell and let someone build $$$ homes for Googlers.
I noticed that Zillow has listed price drops. Most are asking 3 times the rental rate to buy them. That will not work.
And Google laid off 25% of the workers in Mountain View.
They have closed offices, and are reversing plans in Mountain View.
Who will buy the properties?
@Jay why do we put so much faith in a group of individuals to provide housing for an entire community? Every time RHC moved the needle in favor of tenants, landlords and their supporters come out with their disingenuous talking points. Landlords want a system that encourages arbitrary price points and deregulation because it servers their needs.
if Google lays people off, maybe they’ll move elsewhere in search of work and ease the pressure on Mountain View housing. Most everyone here is an “economic migrant” (very few grew up here) so if they came here for a career opportunity, they’ll move on for a better one. Let’s send them and our housing problems, somewhere else!
With over 1000 new apartments ready to be leased, and the fact that the local for sale market is dropping, the city for years hoped that Google would always bail it out.
In fact Bayshore has been a project in work since 2007, still not one building actually built.
And now the valley and bay area is going to go through a tech reduction it has never seen. Many are getting ruined because of it. They all bet on tech, never having to permanently reduce their footprint.
It is happening severely now.
Hold on. There’s a ton of misinformation in the whole thread.
Google did lay off 6% of global employees but remember they still have more total employees than pre-mandemic. Even if Google was the bad guy with respect to local housing prices (and I don’t buy it, without actual hard evidence of the pros vs the cons) these small changes in headcount are not a big factor because there are so many tech companies here.
@Former Doormat with your comment below, it shows you have never been a small landlord, because most renters think prices are arbitrary but landlords know that it’s way too simple to say that, and sometimes you have a negative cashflow for years so you can eventually make a profit. In fact, if you bought today you might well lose money for a decade.
“Landlords want a system that encourages arbitrary price points and deregulation because it servers their needs.”
That’s actually such a reductive argument it’s silly, honestly.
Most people in MV don’t know there are zero property owners or even landlords on the Renta Committee. Yep. That’s so broken that it boggles the mind. The people on the committee think they know the business of property management but the average person who rents says things like rent prices are arbitrary.
Jay,
The local office laid off 25% of its workers if you do a little research.
SF Chronicle and Merc News reported over 1,300 jobs laid off in Mountain View in Jan 2023.
So those are gone. This was 25% of the total workers in that location.
Time to get ready for new conditions. Many local tech offices are closing. WeWork is leaving San Antonio because they can’t pay the rent. There is a lot going on.
Jay,
In Jan the local Google office laid off 1300 employees. Which was 25% of the people workin in that location.
You can read it in the SF Chronicle and Merc News.
This has had a significant impact on the city. And will eventually help crash the local rental market.
You have to keep in mind that for the real impact you have to consider contract workers. Google cut back a lot on these too. They also did cut back on their movement toward future growth. At the same time hey are continuing with some of their plans in Sunnyvale, which is part of why they had to cut back both there and in Mountain View too. They were never very open about what they had in mind in the first place.