Quarterly vs. Monthly Tier Structure

When a multi-housing manager stopped by our booth at an Apartment Association trade show a few months ago, she asked me, “Why Read/Bill/Collect companies exist? I mean, we visually read our own water submeters and do the billing ourselves.”


Aside from the fact that doing the reads yourself is a great way to open yourself to at least the perception of conflict-of-interest, computing the correct rates (read correct as another way of saying legal) is not so simple.

You see, during our conversation, she mentioned that her property is billed quarterly and she bills residents monthly. Aha!!! I asked for a copy of her last quarterly bill and a sample resident bill that she sends out.

A couple weeks later, I received a copy of a quarterly property-wide bill and a resident bill. Guess what? The property manager wasn’t an expert on rate analysis and so she had been shortchanging the landlord for thousands of dollars per month for years.

How so? Their water and sewer tier structures are based on how many gallons of water the property consumes per quarternot per month. Since she was billing each resident on what that resident consumed per month, she was billing residents only in the first tiers. And their second water tier was 50% more than their first tier. Their second tier sewer rate was 70% more.  And ready for this? Their third tier water – which no resident had paid in years – was 300% of the first tier rate.

This is only one example of many in which what looks like a simple rate question is actually more complicated than it appears. Incorrect and illegal billing of electric, gas and water can result in massive penalties.

She signed on. A new and happy client!

FAQ on Submetering and RUBS

When looking into how to recover water, sewer and other utility costs, the single most common questions center around cost and Return On Investment. And that’s the way it should be – Landlords and Property Managers are bottom-line businesspeople.

Here’s some tidy answers to Frequently Asked Questions about submetering and Ratio Utility Billing. Note the ROI comment about RUBS. The definition of ROI is Annual Profit divided by Investment Cost. But since RUBS has zero investment cost, you’d have to divide by zero…and as you’ll recall from math class, any number divided by zero yields “undefined” as the answer.

Billing residents for water and sewer is a conservation measure that helps profitability of apartment communities as well as condo associations, shopping centers and various mixed use properties. No matter how most people want to conserve simply because it’s the right thing to do, the harsh reality is that green money trumps green conservation.

When people get all the water or gas or electricity they want for no cost, they don’t report leaks and they waste. But when one’s usage is tied to one’s wallet, people conserve.

Oldest at FAA Conference

When National Apartment Association published an excerpt of Leopold Hawthorne’s historic interview a few days ago, many industry insiders were surprised. How could it be that some multifamily experts didn’t even know there was a 300 year old property manager? Would they ever have opportunity to make acquantance with Leopold Hawthorne?

Although Mr. Hawthorne treasures his privacy, CWE has convinced him to launch a national tour. It all starts at Florida Apartment Associaion Annual Conference today through Friday. Meet Leopold Hawthorne at CWE’s booth – #320.

Forgive him if he seems a little cranky at the ripe old age of 300. Don’t be shocked if he complains about troublesome tenants and terrible vendors of yesteryear. You might want  to pay attention when he sings the virtues of submetering and RUBS – or at least humor him!

Click below to see where he is interviewed by Mitch Drimmer. To let us know what you think, make a comment below…or if you want to know more about submetering or RUBS, click here.