The Santa Monica Rent Control Board has definitively established that landlords can’t exceed rent limits by engaging in Ratio Utility Billing Systems, or “RUBS.” Unlike those who use individual meters or submeters, landlords who use RUBS don’t charge tenants for their actual utility use. Instead, they divide a building’s master-metered water bill by the number of units. These landlords then pass that bill on to their tenants on a pro rata basis—resulting in a charge that may bear no relation at all to the amount of the utility that any individual tenant actually uses.

Action Apartment Association sued the Board, asking the court to rule that landlords may charge tenants as much as they like using RUBS because, the Association argued, a RUBS charge isn’t “rent,” and is therefore not subject to rent limits. The Association first argued that landlords have the right to engage in RUBS under state law, but dropped that claim when the Board pointed out that California law (Civil Code Section 1954.216, subdivision (c)) specifically says that there is no state policy for or against RUBS. State law allows landlords to charge tenants for their individual actual water usage by installing submeters, but leaves the regulation of RUBS to local jurisdictions.

In the absence of any relevant state law, the Association next argued that landlords have the right to use RUBS to charge more than the controlled rent because a RUBS charge isn’t rent under the City Charter. But City Charter Section 1801(f) defines rent as any “periodic payments…rendered to or for the benefit of the landlord under an agreement concerning the use or occupancy of a rental unit….” Superior Court Judge Mitchell Beckloff ruled that a RUBS payment falls squarely within that definition. Because statutes generally mean exactly what they say, Beckloff ruled, he had no choice but to reject the Association’s argument and enter judgment for the Board.

“This is a great result for the rule of law, to say nothing of common sense. Action Apartment Association was asking the court to ignore the plain language of the City Charter,” said Board general counsel J. Stephen Lewis. “Action was really just asking the court to legislate from the bench, and to substitute a policy preferred by a small group of landlords for the actual law, which advanced a policy created by the public at large,” added Rebecca Sherman, the Board’s senior litigation counsel.

The court agreed with the Board that the Association was making a policy argument, and not a legal one. Its only real argument was that, as water costs rise, it would be more fair to make tenants bear the burden of the increased costs, because it is a building’s tenants who use its water. But, as the court noted, in the United States, “it is for the [political branches, like the] Legislature, not this court, to determine appropriate public policy.” In any event, the court also noted, the state “legislature has done so” by allowing landlords to install submeters, which result in tenants being charged only for the water that they actually use.

The case was Action Apartment Association v. Santa Monica Rent Control Board, Los Angeles Superior Court Case Number SC 125857. For more information about the Santa Monica Rent Control Law, visit http://www.smgov.net/rentcontrol.

Submitted by Dan Costello, Rent Control Board Public Information Manager

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