Is it time to install sub-meters on your multifamily property? Sure, it’s easier to divide the utility bill among everyone evenly, but is that really fair? Why should a senior resident on a fixed income who never runs more than one light pay the same as a family of four? Residents are much happier when they have control over their utilities and their conservation efforts have a direct, measurable impact on their own pocket. Utilities are the biggest uncontrolled expense of mobilehome parks and installing sub-meters reduces your risk when utility rates increase. It is a lengthy process, but well worth it. The Mobilehome Residency Laws tell you how it is done. Below is an excerpt of the code regarding changing over to sub-metering.
Any separately billed utility fees and charges shall not be deemed to be included in the rent charged for those spaces under the rental agreement, and shall not be deemed to be rent or a rent increase for purposes of any ordinance, rule, regulation, or initiative measure adopted or enforced by any local governmental entity which establishes a maximum amount that a landlord may charge a tenant for rent, provided that at the time of the initial separate billing of any utility fees and charges the rent chargeable under the rental agreement or the base rent chargeable under the terms of a local rent control provision is simultaneously reduced by an amount equal to the fees and charges separately billed. The amount of this reduction shall be equal to the average amount charged to the park management for that utility service for that space during the 12 months immediately preceding notice of the commencement of the separate billing for that utility service. This rule applies to natural gas, liquid propane gas, electricity, water, cable television, garbage or refuse service and sewer service.
What does that mean for you?
Basically, this is saying there are 6 steps to begin sub-metering your multifamily property in California:
- Install your sub-meters.
- Learn how to calculate utility charges or hire a company to do it for you.
- Calculate the monthly utility bills for each space (but don’t bill them for it). Consider putting that information on the monthly statements so residents don’t get sticker shock when billing goes live.
- Average 12 months of utility bills per space to calculate the individual rent reductions.
- Provide appropriate notice to residents for their rent change.
- Reduce the rent and begin sub-metering.
So, no matter what, this process is going to take thirteen months plus installation time.
An important reason to sub-meter water is the excessive use charges in California. They are currently billed at the discretion of each water utility company. If yours bills surcharges, it will be nearly impossible to know which spaces are driving up costs. What better way to encourage conservation and find leaks than by sub-metering? That allows you to pass through any high-usage surcharges to the residents that are driving up the water bill. Now that you’ve got meters installed, you should read about how to read them properly . Find more information on why we recommend this here.
If you would like help with calculating the utility bills, please contact us.