Mountain View’s rent control measures may have hit its limit with a utility billing system that tenants argue has left them in the dark trying to figure out what they owe the landlord each month, including big changes month to month.
It turns out the volatility in utility payments – specifically costs passed on from landlords to tenants – may be out of step with the Community Stabilization and Fair Rent Act (CSFRA), the city's rent control law. An analysis of the CSFRA's language found that utility fees paid to landlords are considered a part of rent and subject to limitations in increases, according to a city memo.
This isn't a big issue for renters who pay utility companies directly, but raises legal questions when tenants are paying the landlord. The problem lies with tenants paying unpredictable amounts through a so-called ratio utility billing system (RUBS), which many landlords use for rental properties with multiple units that rely on one master utility meter.
For landlords, RUBS streamlines the process of collecting utility fees from tenants, especially in instances where submeters are not installed. It distributes the utility costs of the property among all the tenants, calculated based on factors like square footage, the number of bedrooms in a unit and the number of household members in a unit.
For tenants, RUBS can be confusing; charges are not tied to individual usage and can fluctuate outside their immediate control. Also, tenants often are charged a nominal monthly service fee that is passed on from landlords who use third-party billing services, like Conservice or Multifamily Utility Company.
The opaqueness and sudden spikes in utility costs can be especially burdensome for lower-income households and can lead to housing instability, said Anky van Deursen, program manager for the CSFRA, at a presentation to the Housing Rental Committee on Monday, Aug. 21. The rent control law is meant to protect tenants from unpredictable and frequent rises in rent to promote housing stability, she said.
Reyna Dominguez, a Mountain View renter, said she never has a clear idea of what to expect with her Conservice utility bill, as it changes every month. “I want to pay utilities, it's fine, it's not a big deal. The big deal is that it’s never the same amount, and every single time it’s different,” she said, noting that she didn't know why some tenants pay more than others even though they live in the same type of apartments.
Landlords pushed back against characterizations of RUBS’ fluctuating fees and unclear billing practices. “Bills are not swinging wildly,” said Anil Babbar, a staff member with the California Apartment Association, at the Monday meeting. "What impacts the bill amount is usage. And usage is determined by how much an actual person uses plus maintenance issues." RUBS encourages tenants to practice conservation and quickly report maintenance issues, like leaky faucets and running toilets, he said.
But the data presented by the city was not as conclusive, particularly when it came to the issue of conservation. “Little evidentiary support has been provided to conclude that the use of RUBS results in greater conservation efforts by tenants,” van Deursen said, explaining that the city did not find any data that confirmed the RUBS conservation percentages provided by landlords and Conservice at stakeholder meetings.
While RUBS is an established national industry practice, it is not allowed in many rent-stabilized jurisdictions, such as San Jose, East Palo Alto and Oakland; in other jurisdictions like Berkeley, Hayward and San Francisco, some exemptions apply.
CSFRA regulations complicate potential carveouts for exemptions in Mountain View. Rents can only increase once during a 12-month period, and these increases also are limited by the regional rate of inflation or Annual General Adjustment, which is capped at 5% for 2023, according to the city’s rent control laws. RUBS, as it's used today in Mountain View, also runs afoul of CSFRA's rent increase noticing requirements.
"Staff's conclusion is that RUBS violates the CSFRA," according to the city memo.
The Monday meeting was a study session and no final decision was made on RUBS, but the Rental Housing Committee asked staff to return with more details to clarify the regulations of CSFRA. The committee also sought to explore compliance options that would allow a one-time rent adjustment to offset the fluctuations of utility charges.
For committee member Kirin Madison, transparency, predictability and guidance were key to bringing RUBS in line with the city’s rent control measures. “Transparency and predictability, those were two terms that came up on both sides of the aisle,” she said. “So, I think we have a vested interest in making sure that we are enforcing those and the regulations that we come up with, as well as protecting our low-income tenants.
“As well as education,” she added. “I think a lot of the fear comes out of not knowing exactly how it’s working.”