A recent staff report issued by the Los Angeles Housing Department (LAHD) signals potential regulatory changes that could affect how multi-family property owners recover utility costs. The report was prepared in response to a City Council directive to evaluate the use of Ratio Utility Billing Systems (RUBS) and similar third-party billing practices in master-metered apartment buildings.
While the report does not implement new law, it outlines recommendations that may shape future policy discussions in 2026 and beyond.
Key Recommendations Under Review
Restrictions in Rent-Stabilized Properties
For buildings subject to the Rent Stabilization Ordinance (RSO), the report recommends eliminating RUBS and comparable unmetered billing systems. Instead, utilities currently billed separately could be reclassified as part of rent. Owners would be allowed to apply for a one-time rent adjustment based on historical utility usage, excluding administrative fees and capped at city-defined utility allowance levels.
This shift would effectively lock utility cost recovery into the rent structure, limiting an owner’s ability to pass through future increases.
Enhanced Disclosure for Non-RSO Units
For properties not covered by rent control, LAHD proposes stricter transparency standards rather than an outright ban. These include:
Clear written explanations of how utility charges are calculated
Itemized monthly billing statements
Tenant access to master utility invoices upon request
Formal processes for tenant disputes and billing corrections
The goal, according to the report, is to address tenant concerns around inconsistent or difficult-to-verify billing practices.
Why This Matters to Multi-Family Investors
Although still in the early stages, the recommendations highlight several risk areas investors should evaluate:
Constrained expense recovery in rent-stabilized assets as utility costs continue to rise
Operational changes to billing systems, disclosures, and lease language
Regulatory momentum toward increased oversight of owner-controlled cost pass-throughs
For owners with master-metered properties, particularly older RSO-covered buildings, the proposed framework could meaningfully alter cash-flow assumptions over time.
Industry Perspective
Rental housing organizations have raised concerns that the recommendations may go beyond the original scope of the City Council request and could create additional administrative burdens without offering sufficient mechanisms for ongoing cost recovery. Industry groups are actively engaging with policymakers as the conversation continues.
What Comes Next
The LAHD report is expected to move into City Council review, where hearings, revisions, and potential ordinance drafting may follow. No implementation timeline has been finalized.
Owners and investors may want to:
Review existing utility billing practices and lease structures
Stress-test financial projections for rent-controlled assets
Monitor upcoming council actions and policy discussions
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