San Jose Prohibits Rent Controlled Housing’s Use of RUBS

June, 2018

On May 11, 2018, the San Jose City Council voted to enact Ordinance 30090 prohibiting property owners from using Ratio Utility Billing Systems (“RUBS”) to pass on utility charges to tenants in rent-controlled housing.

What is the purpose of the elimination of RUBS?

Proponents of the elimination argued that the use of RUBS results in a financial hardship to residents due to the monthly cost variations that are very difficult for a tenant to predict/plan for.

What does this mean?

Property owners of rent controlled housing may not use RUBS to pass on utility charges to tenants. “Utilities” are electricity, natural gas, telephone, water, waste water, sewer, refuse and waste management services.  San Jose Rent Control applies to all units in the City of San Jose built before September 7, 1979, except two-unit buildings, single-family homes, and condominiums. (San José, Cal., Mun. Code Title 17, c. 17.23.150 (2017)).

When does the elimination of RUBS go into effect?

Existing RUBS agreements are void as of June 7, 2018.

 What properties are exempt from the elimination of RUBS?

The following housing is exempt from the elimination of RUBS:

  • Hotel rooms rented to guests for less than thirty days;
  • Rooms in a hospital, extended care facility, emergency residential shelter, asylum, nonprofit home for the aged, fraternity house, sorority house, or in dormitories owned and operated by a school;
  • Units built after September 7, 1979;
  • Two-unit buildings, single-family homes, and condominiums;
  • Government operated or subsidized rental units.

Can I Do Anything to Minimize the Financial Impact?

Owners with written utility contracts for water, sewer, and/or garbage in place prior to January 1, 2018 may petition the Santa Clara County Housing Authority for a one-time “Offset Increase” rent increase equal to the lesser of the average monthly utility charges under the RUBS pass through agreement in 2017 or limited by the 2018 Santa Clara County Housing Authority Utility Allowance rates (which for water, sewer and trash are $86 for a studio, $91 for a one-bedroom, $102 for a two bedroom, and $149 for a three bedroom, and for gas and electricity are $36 for a studio, $58 for a one-bedroom, $70 for a two bedroom, and $84 for a three bedroom). This option is not available to owners with verbal RUBS agreements.

*Owners must file their petitions for the one-time Offset Increase between July 5, 2018 and October 21, 2018.  

No Offset Increases will be awarded for Rental Voucher Units.

What Additional Fee Limitations Were Implemented Under Ordinance 30090?   

Ordinance 30090 also prohibits:

  • Key and security card replacement fees in excess of the actual replacement cost plus $10, unless approved by the Petition or the Regulations;
  • NSF fees in excess of Civil Code §1719 (which allows NSF fees of $25 for the first bounced check and $35 for subsequent bounced checks);
  • Late fees of more than five percent (5%) for rent that is 3 or more days late;
  • Application screening fees in excess of amounts allowed under Civil Code §1950.6(b).  

These amounts must be clearly listed on the rental agreement and the rent invoice (if any) and must be accompanied by a copy of the invoice or bill paid by the landlord for the charge.

Have additional questions regarding the moratorium and how it affects you?

Please contact Dana Wares at (800) 525-1690 or dana.wares@kts-law.com with any questions.

Kimball, Tirey and St. John LLP is a full service real estate law firm representing residential and commercial property owners and managers. This alert is for general information purposes only. Laws may have changed since this article was published. Before acting, be sure to receive legal advice from our office.  If you have questions, please contact your local KTS office. For contact information, please visit our website: www.kts-law.com. For past Legal Alerts, Questions & Answers and Legal Articles, please consult the resource section of our website.

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