By Danielle M. Leidner-Peretz, Founder of DLP Government Relations, LLC

At the intersection of aging housing stock, evolving housing policy and modern building standards sits some of California’s most affordable housing. These properties carry an ever-growing accumulation of regulatory obligations while operating within infrastructure designed for a different era. RUBS, Ratio Utility Billing Systems, is a reflection of that dilemma.

In master-metered buildings, RUBS provides a methodology for allocating utility usage and costs among residents where individual usage cannot feasibly be measured. What started as an operational solution has become the subject of increasing scrutiny around billing transparency and in some instances, bans on the practice entirely.

As I evaluated the policy trajectory of this issue, an interesting development presented itself: the collision of policy determinations and operational realities. Government response to RUBS has generally fallen within two categories: those focused on enhanced transparency and disclosure requirements and those that adopted restrictions or outright bans. Several California localities: Mountain View, Oakland, San Jose, Santa Monica and West Hollywood have regulations that defined utility costs as rent or imposed outright RUBS bans on RSO properties.

In Los Angeles, the issue of greater RUBS transparency was raised by the City Council in 2022, with final action on the matter yet to be taken. RSO properties in the City represent some of the oldest and most affordable housing; they are also among the most regulated. The initial Council directive called for recommendations to implement transparency requirements, disclosure, dispute resolution protocols and related matters. The resulting Los Angeles Housing Department (LAHD) recommendations for the City’s RSO units go well beyond transparency, proposing an outright ban, a redefinition of rent and a one-time transitional rent adjustment process that was not part of the original inquiry.

To truly understand the RUBS issue within Los Angeles, it must be viewed in combination with several other factors, not the least of which is the City’s recent RSO formula amendments, which took effect in February 2026. Under the new formula, annual rent increases are based on 90% of the annual percentage change in CPI subject to a cap of 4% and a floor of 1%. The previously permissible increases related to owner-paid utilities were also eliminated. The tension comes to life when those policies intersect with the operational realities of older buildings.

When these facts are stacked up, they reinforce this dichotomy. RSO rental properties are nearly fifty years old or older, subjected to an even more constricting annual rent increase cap and greater cost recovery challenges. Approximately 19% of RSO rental units are master-metered, according to the City’s own data, creating structural encumbrances on top of the financial hurdles.

When one mechanism for allocating a cost is removed, the cost doesn’t go away. It must be absorbed or redistributed elsewhere. Ironically, the City’s housing policies clash with the very objectives of affordability and housing preservation that they seek to maintain.

There is also another dynamic at play. Housing policy does not exist in a vacuum. When policies are being developed to address a specific concern, other and potentially equally important goals become secondary considerations. In the case of RUBS, one of the issues raised by property owners was the beneficial impact on water conservation and the City’s conservation goals. California has prioritized and invested significantly in water sustainability and resiliency initiatives such as Pure Water LA. The LAHD report mentions the issue within the context of stakeholder concerns, yet based on the report, conservation doesn’t appear to have received further evaluation. Notably, one of the cities referenced in the LAHD report is San Jose, a city that banned the use of RUBS for RSO units in 2018 and revisited the matter in 2025, the same year as the LAHD report was released.

Following San Jose’s adoption of a RUBS prohibition, an industry-commissioned study examining its impacts on water consumption concluded that the ban likely played a significant role in the 11-12% increase in median water usage of the sampling of approximately 4,000 apartments. The correlation between water consumption and payment for usage is not surprising and follows a simple logic. We are more likely to be mindful of our use of something when we pay for it than when we don’t. Mayor Mahan of San Jose’s direction to the City Manager reflects that understanding and the acknowledgment of the consequences “due to the city’s regulations, residents of these master-metered buildings do not pay for the water they use, disincentivizing conservation and exponentially increasing utility bills for property owners.” The City is now evaluating how to rectify the situation by aligning the City’s policy with HUD guidelines.

Colorado provides another instructive comparison. Colorado enacted a law focused on transparency in residential leasing. Concerns emerged on whether the new law effectively eliminated the use of RUBS. The subsequent law signified a recognition of the operational importance of RUBS for existing buildings while preserving consumer protection safeguards.

The real debate is not about RUBS at all. RUBS is simply a window into policymaking and the consequences of conducting evaluations in silos.

And that is the real rub.

Danielle M. Leidner-Peretz is the Founder of DLP Government Relations LLC, specializing in expert advocacy and ethical insight. She offers strategic counsel across a range of policy issues, delivering tailored, results-driven solutions for navigating complex government and regulatory challenges. She previously served as the Director of Government Relations for the Apartment Association of Greater Los Angeles. For more information, go to www.dlpgovernmentrelations.com.