SUBMETERING RESULTS IN MULTIFOLD BENEFITS ACROSS THE COUNTRY.

Submetering can save you thousands of dollars. Ruiz explains both why and how submetering is beneficial to you.

Due to the rising cost of land, and the energy crisis affecting a large part of the country, utility submetering has become a hot topic among multifamily housing developers. By installing submeters in apartment communities and establishing a billing system with a utility management provider that allocates water and sewer costs back to residents, owners are able to recover costs while contributing to water conservation efforts.

"Submetering is having a huge impact on the multifamily industry and the trend is continuing to grow across the country as more and more property owners become aware of the numerous benefits submetering affords," said Robert Fincher, Executive Vice President of Sales and Marketing for National Water & Power (NWP). "An independent study (Submetering RUBS and Water Conservation, June 1999) conducted by the National Apartment Association (NAA) reveals that the adoption of submetering and billing systems is dramatically increasing each year. In fact, in the three-year period from 1998 to 2000 the number of apartment homes using utility cost recovery has increased by approximately 525 percent."

Cost Recovery

Water and sewer costs are rising in many areas across the country due to increased population, decreasing water supplies, rising costs of distributing water and increasing costs of treating sewage. According to a November 1999 article in the Wall Street Journal, costs of water increased 43 percent from 1994 to 1999. These increases are due specifically to the vast infrastructure of dams, reservoirs, canals, pump, levees and sewage systems installed to meet the growing demand of an increasing population. The fact that water and sewer costs are rising faster than the inflation rate is a significant factor in owners' decision to adopt utility billing systems.

"It is very difficult for owners to continue absorbing the rising costs of water," said Fincher. "Submetering has become a particularly cost-effective tool in regions such as Southern California, where increasingly high property prices make it very difficult for multifamily developers to recover costs and offer affordable housing. As an example, the average multifamily property is comprised of 285 units and the average water bill runs about $24 to $30 per unit. If the resident pays his/her own water bill, that can be a property-wide savings of anywhere from about $6,840 to $8,550 per month or from about $82,080 to $102,600 per year for the owner. If an owner has 10 properties, that is a very significant savings.

"We have passed along water, sewer and trash charges to our residents for almost ten years now," said Frank T. Suryan, Jr., President of Newport Beach, California-based Lyon Management Group Inc. "Residents understand that there is a cost for these services regardless of the method used in allocating the cost. As a result, we have been able to reduce the utility cost related to resident consumption on all of our properties, thereby saving significant cost to the properties. We have found that when residents are held accountable for consumption, the entire community is more aware of conservation."

Conservation

Recent studies indicate that when individual apartments are submetered and residents pay for their own water, water usage decreases significantly. In an independent study conducted for NAA and the National Multi Housing Council (NMHC) by Industrial Economics Inc., it was concluded that water consumption was significantly lowered in properties that allocated water and sewer charges back to residents than in properties that did not. According to the study, it is estimated that submetered properties used between 18 and 39 percent less water.

Water conservation is a very important issue in many areas of the country which are experiencing severe droughts. For instance, the National Drought Mitigation Center, a federally sponsored research institution that collects and analyzes drought information throughout the United States, indicates on its rainfall maps that New England has been experiencing drought conditions much of the time since 1997. As populations continue to grow in areas, such as Southeastern Massachusetts, water shortages are beginning to emerge, raising concerns about the need to establish building moratoriums.

"To further use Massachusetts as an example, if half the apartment residents in the state were paying for their own water service, the state would save approximately 1.2 to 7.5 billion gallons of water per year, which would be enough water to supply residents of a city of 83,000 to 520,000 people," said Fincher.

Avoiding Sewer Moratoriums

Tied directly into water conservation is the issue of wastewater production. If water consumption at a property is reduced by 18 to 39 percent, then likewise the wastewater flow is reduced by 18 to 39 percent. As a result, the load on local wastewater infrastructure is abated and overtaxing of treatment plants is avoided.

"If production of wastewater is too high and sewage treatment facilities are overtaxed, municipal regulators may be forced to step in and declare a moratorium on residential and commercial construction," said Fincher. "So, if property owners establish a submetering and water billing system to help alleviate wastewater production from apartment complexes, it is possible that a building moratorium can be avoided."

Management Tools

"We believe that along with providing customers with cost recovery and conservation tools, submetering companies should also develop services to help property managers work more efficiently and effectively," said Fincher. "At NWP, we have introduced IRIS, an Internet Reporting and Information Service for multifamily owners and property managers, which provides an accurate and daily updated record of each unit and resident being billed for water by NWP. The service dramatically cuts down work load by eliminating time consuming and wasteful paperwork and allowing property managers to enter and access resident and unit data around the clock."

IRIS is password protected and gives property managers the ability to input into the Internet their property's resident activity, including move-ins, move-outs, roommate changes, services added, and start and stop billing information.

Other key features of the service include a real-time delinquency report, updated daily with each resident's current billing history; a billing status report, which indicates the total amount billed to residents within a billing cycle; a current resident list, which allows the property manager to know who is currently being billed, including past due amounts; a transaction report, summarizing all Internet activity entered by the property manager and NWP; and a final bill register (FBR) which summarizes the monthly billing cycle by resident.

The NWP Web-based information transfer and reporting system is state-of-the-art," said Stephen Parthum, Vice President Asset Management for Berkshire Realty Holdings, L.P. "It allows for the timely and accurate transfer of data and allows all applicable people within my organization to view reports at the touch of a button saving valuable time and energy. As a corporate/headquarter-based asset manager responsible for monitoring our program across the country, I have found the system to be a valuable tool. In addition, our on-site staff benefits tremendously by having online access to the NWP system and having access to reports and data as needed."

IRIS also offers a portfolio function, which contains comprehensive reports on all properties at which an owner is using NWP's billing services. The reports include all properties' billing activities over a three-month period, all billed properties within a specific month, all properties pending billing and scheduled bill dates.

Whether you are helping to conserve water, or saving thousands in water bills, submetering is a viable and affordable option for both owners and residents.

Carol Ruiz is the Director of Public Relations for Redondo Beach, California-based Nelson & Gilmore, a full service public relations and advertising agency specializing in the residential and commercial real estate marketing.

Carol Ruiz is the Director of Public Relations for Redondo Beach, California-based Nelson & Gilmore, a full-service public relations and advertising agency specializing in residential and commercial real estate marketing.