Submetering case studies: multifamily property owners explain cost, potential savings and conservation qualities of submetering systems.Rising utility bills and droughts or shortages of natural resources have spurred multifamily property owners across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. to implement submetering or utility allocation programs in order to recover revenue and promote resource conservation. Of the estimated 10 million investment grade multifamily properties across the country, between 2.5 million and 3 million are currently allocating water and sewer SEWER. Properly a trench artificially made for the purpose of carrying water into the sea, river, or some other place of reception. Public sewers are, in general, made at the public expense. Crabb, R. P. Sec. 113. costs to their residents. according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the Highland. Ill.-based National Submetering and Utility Allocation Association (NSUAA).
Owners can separately bill utility costs to residents by having submeters installed in each apartment home and charge residents for the exact amount of water they use. Or, they can implement a RUBS RUBS Ratio Utility Billing System
RUBS Resident Utility Billing System (ratio utility billing system) program, which bills for water and sewer based on allocation methods of square footage, occupancy or number of fixtures in an apartment.
"Even in normal times it is very difficult for apartment owners to absorb the total cost for utilities," said Charles Stolberg, Executive Director of NSUAA. "In a time when they are facing dramatically increasing costs for water and energy, utility submetering Utility Submetering is the implementation of a system that allows a landlord, property management firm, condominium association, homeowners association, or other multi-tenant property to bill tenants for individual measured utility usage. and allocation is a very effective way for owners to recover significant revenue and improve property value."
JVM See Java Virtual Machine.
JVM - Java Virtual Machine Realty realty n. a short form of "real estate." (See: real estate)
REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property.
John McCloud, Senior Vice President of Oak Brook, Ill.-based JVM Realty, has been submetering the company's multifamily properties since 1998, The company's portfolio comprises 20 apartment communities totaling 4,500 apartment homes in Indiana, Michigan, Missouri, Ohio and Wisconsin JVM Realty was one of the first property owners in many of their markets to install gas and water submeters and bill residents for utility usage.
"With many utility bills increasing by 15 percent or more each year, it was critical that we find a way to recover revenue," said McCloud. "Last year alone, our gas bills, which in this region are more of an issue than water bills, increased by more than 75 percent and it is obviously not possible to raise rents by the amount necessary to meet that expense, so we had to find another way to generate income or reduce expense.
"We decided early on to take a proactive approach in order to implement the most effective submetering program possible, said McCloud. "The first step was to make sure that I was completely educated on submetering issues and then to ensure that my management staff was on board by providing them with adequate training and implementing regular meetings to keep the process running smoothly and effectively."
McCloud said he also stays current on submetering issues through his membership in the National Apartment Association its local affiliates and NSUAA.
"I [seek information] prior to the purchase to determine what the regulatory climate regulatory climate
The extent to which a regulated firm or industry is permitted to earn an adequate return on the stockholders' investment. This term is nearly always used in reference to utilities, which are required to obtain approval for rate changes. is in the state as well as the local region. which helps me decide whether to install meters or to opt for a RUBS (ratio utility billing system) program," McCloud said.
According to McCloud, it is ideal to have submeters installed at the time of construction or retrofitting an older property if the plumbing plumbing, piping systems inside buildings for water supply and sewage. The Romans had a highly developed plumbing system; water was brought to Rome by aqueducts and distributed to homes in lead pipes—hence the name plumbing from the Latin word plumbum configuration will permit it.
"Many other property owners have told me that they do not have the money to make the initial investment to install meters. But I recommend that they find a way to fund it because the payback period Payback Period
The length of time required to recover the cost of an investment.
Calculated as: is rapid--usually about one year to 18 months, and the revenue recovery is ongoing," said McCloud.
"For example, when we purchased a 169-apartment home community in Indianapolis, I asked our bank to add the cost of meter installation onto our loan, which they readily did after I demonstrated how the program significantly increases property value. It cost about $225 per apartment home to install the gas submeters at that property, for a total of $38,025, and our mortgage increased by only $500 per month," said McCloud.
"The gas bill for that property alone is $85,000 per year and we recover about 70 percent of those costs, after factoring out common area and vacant apartment home costs, a savings of $59,500 per year, which far surpasses the initial installation cost.
"Another huge benefit is that our property value has increased exponentially ex·po·nen·tial
1. Of or relating to an exponent.
a. Containing, involving, or expressed as an exponent.
b. , which I calculated by taking the $59,500 at a 9.5 percent cap rate (rates can vary), which raised the property value by more than $500,000," McLoud explained.
McCloud said there are also conservation benefits to submetering, which are particularly important at a time when large regions of the country recently have suffered droughts and energy crises.
"An obvious trend has emerged now that residents are responsible for their own utility bills. Before the days of submetering, it was not uncommon to see windows open or hear air conditioners Conditioners used on leather take many shapes and forms. They are used mostly to keep leather from drying out and deteriorating.
A very old and widely used conditioner is dubbin. running in the middle of winter with heaters going full blast. It was a way to cool down the apartment, but now that residents are responsible for their own bills, they tend to just turn down the heat. In addition, I have seen a marked difference in how much faster residents report water leaks now and I know they are much more conscientious con·sci·en·tious
1. Guided by or in accordance with the dictates of conscience; principled: a conscientious decision to speak out about injustice.
2. about waste.
"If I were to give recommendations to owners considering submetering, I would advise them to make sure their management team fully understands the value of the program and receives the appropriate training. I would also implement a monitoring system with regular meetings to ensure that the program continues to run efficiently, especially ensuring
that collection of delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent.
DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. bills is being diligently dil·i·gent
Marked by persevering, painstaking effort. See Synonyms at busy.
[Middle English, from Old French, from Latin d pursued.
"It is also critical to hire a good metering/billing company, which can be found through recommendations from other multifamily" companies."
Northland north·land also North·land
A region in the north of a country or an area.
northland Investment Corp.
In Texas, where drought conditions "Drought Conditions" is episode 126 of The West Wing. Plot
Senator Rafferty, a new presidential candidate garnered much media attention with a ground-breaking speech about health care. have plagued many areas of the state for nearly 10 years, water submetering is a hot issue. In fact, in 2001 the Texas legislature The Texas Legislature is the state legislature of the U.S. state of Texas. The legislature meets at the Texas State Capitol in Austin. In Texas, the Legislature is considered the most powerful branch of state government because of its aggressive use of the power of the purse to adopted a new law requiring new properties to either be plumbed for submeters, or, in cases in which the water utility offers individual meters, the property must have submeters installed or have individual meters installed during construction of new apartment properties built after Jan. 1, 2003. The law also requires leak audits and installation of water-conserving plumbing fixtures as a condition to adopting billing systems.
Properties built prior to 2003 can continue to implement a RUBS (ratio utility billing system), also know as an "Allocation Billing Method," where each resident is billed a pro-rata portion of the total water/sewer consumption based on square footage and number of occupants. This is the predominant pre·dom·i·nant
1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant.
2. method used by Massachusetts-based Northland Investment Corp., which owns 32 multifamily properties totaling 10,185 apartment homes in Arizona, Connecticut, Florida, Massachusetts Florida is a town in Berkshire County, Massachusetts, United States. It is part of the Pittsfield, Massachusetts Metropolitan Statistical Area. The population was 676 at the 2000 census. , North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures
Area, 52,586 sq mi (136,198 sq km). Pop. , Tennesee and Texas.
Of those apartment homes, 7,614 are billed via a RUBS method and 932 are submetered.
"Depending on the property, water submeters can be installed for $125 to $175 per [apartment home]," said Kirby A. Vogler, Assistant Vice President of Northland Investment Corp., who is based in the company's Houston offices.
"On average, we are recovering approximately 80 percent of our utility costs and at some communities that figure climbs to 90 per cent.
"We carefully track cost savings through in-house reporting to present a model comparing net income to net expense. We do this by using our income statement to compare historical costs we incurred while providing water/sewer service within rents to the income we are now recovering by separating utilities from rent.
"We have also calculated the increase in property value that comes along with submetering or RUBS. For instance, on a property with 285 apartment homes with an average water bill of $7,000 per month, we can add up to $6,000 or more per month to the bottom line. At a 9 percent capitalization rate Capitalization Rate
According to the Appraisal Institute, it is a method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, by dividing the income estimate by an appropriate rate. , that equates to a property value increase of $800,000.
"We also track the conservation benefits inherent in a utility billing program, which are very important to us in Texas. It is widely documented that residents conserve more when they are responsible for their own water bills and our reporting bears that out. Before implementing our utility billing program, the average water/sewer expenses at our communities was $18. After we started submetering and allocating for water expenses, those averages dropped to $16.75, signaling a drop in consumption.
"The billing process is quite simple and manageable as long as you have developed adequate policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental within your organization. I can't emphasize enough that good communication and a well-trained staff can ensure that your submetering or allocation program substantially lowers operating expenses Operating expenses
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , increases property value, and endorses conservation through resident responsibility.
"It is important that we as an industry share our experiences and knowledge so that we can learn all available methods to recover revenue in the face of increasing utility costs and promote conservation in a time of decreasing resources."
BRE (Business Rules Engine) Software that automates policies and procedures within an organization, whether legal, internal or operational. The use of a rules engine (BRE) requires placing the company rules in an external repository that can be easily reviewed rather than Properties Inc.
West Coast-based BRE Properties Inc. has been submetering and using RUBS at some of its multifamily properties for the past 10 years. Experience has taught BRE that a well trained onsite management team makes all the difference when it comes to the successful launch of a new billing program, resident acceptance and optimal collections.
BRE owns 21,943 apartment homes throughout the Western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River
Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century and has submeters at 14,577 of those apartment homes. The balance of BRE's apartment homes use a RUBS program, unless it is illegal in the respective municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. :
"Setting up a new utility billing program takes diligent dil·i·gent
Marked by persevering, painstaking effort. See Synonyms at busy.
[Middle English, from Old French, from Latin d management and sales skills," said Tyler Lenz Kemmer, Vice President, Ancillary Services for BRE Properties. "Each step of the way, from installing submeters to beginning the billing process to collections, onsite management must keep communication open with residents to ensure an efficient and productive program.
"If we choose to submeter a community instead of implementing a RUBS program, the first step of installing meters can involve entering each apartment home. This process takes coordination to minimize disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. of our residents' schedules and to avoid unnecessary time constraints In law, time constraints are placed on certain actions and filings in the interest of speedy justice, and additionally to prevent the evasion of the ends of justice by waiting until a matter is moot. on our staff and the installers. An installation at a 250-apartment home community would typically take about one to two weeks. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified"
meantime, meanwhile , we are vigilantly educating our onsite management and sales staff about the program and its benefits. I cannot emphasize enough that the open communication between management and residents is the key to a successful billing program.
"We also teach onsite management how to communicate the program in a positive way to residents. For instance, in areas of the country where drought conditions are common or environmental concerns are an issue, we emphasize the conservation aspects of submetering. We enlist en·list
v. en·list·ed, en·list·ing, en·lists
1. To engage (persons or a person) for service in the armed forces.
2. To engage the support or cooperation of.
v. the help of our service provider in this effort, working with them to send a letter describing the benefits to residents prior to the first billing period. We also work with our vendor after the installation by giving our residents their toll free customer service number.
"When evaluating how a community should roll out this type of program, management must look at market conditions, what the competitors in the submarket sub·mar·ket
A geographic, economic, or specialized subdivision of a market.
Being below what is usual in a particular market: submarket wages; submarket interest rates. are doing, and the community's budget constraints A Budget Constraint represents the combinations of goods and services that a consumer can purchase given current prices and his income. Consumer theory uses the concepts of a budget constraint and a preference ordering to analyze consumer choices. . The management can then decide whether to bring all the residents on to the billing program or maybe just the new move-ins.
"For the program to reach its optimum level, onsite management must be diligent in the collection of delinquent bills. Our service provider is responsible for collection during the first 30 days after a bill has been sent out, but after that time period, onsite management must contact residents to ensure payment. We have found that if this is done efficiently, the savings are significant. In 2002, BRE recovered approximately $3.6 million in water, sewer and, in some cases, trash costs in our California portfolio alone."
Pryzant Management Co.
For years, Joe Pryzant, President, Pryzant Management Co., Houston, said lie had a problem with high water consumption at his property, Alexander House, in Houston. The apartment homes are large with maw occupants. Most have two bathrooms and 25 percent of the apartments have three toilets.
Pryzant said the high consumption seemed to be due to a combination of lots of people and toilets that wasted water due to old flappers, sticking flush To empty the contents of a memory buffer. See buffer.
Elizabeth Barrett Browning’s spaniel, subject of a biography. [Br. Lit.: Woolf Flush in Barnhart, 446]
See : Dogs
(data) flush levers or broken flow valves. Even when the maintenance technician went door to door to search for leaks (a time-consuming job for a community with 234 apartment homes) he often did not locate the leaks due to their intermittent intermittent /in·ter·mit·tent/ (-mit´ent) marked by alternating periods of activity and inactivity.
1. Stopping and starting at intervals.
2. nature. In 2001, his community's consumption averaged $462 per day, or about $60 per resident per month.
"I immediately grasped the possibility of the wireless submetering technology," Pryzant said. "Not only could I locate leaks without searching each apartment, the occupants could be monitored to determine who was wasting water and which apartments had more occupants than registered on the lease. I decided in the fall of 2001 to commit approximately $60,000 for the system.
"The results did not disappoint dis·ap·point
v. dis·ap·point·ed, dis·ap·point·ing, dis·ap·points
1. To fail to satisfy the hope, desire, or expectation of.
2. me. The system was operational by May 2002. Average consumption was $456 per day for the first four months of the year but decreased to $356 per day the remaining eight months. As the bugs got worked out of the system and as those hard-to-locate toilet leaks were identified and repaired, consumption fell even more. In addition, we used the system to identify those apartments with too many residents or whose consumption patterns were wasteful.
"In December, the bills declined further after we began billing residents for their water consumption. March 2003 and April 2003 bills were approximately $270 per day; May fell to $254 (though occupancy also declined that month). The difference between $462 in April 2001 and $270 in April 2003 is $192 per day--a payback Payback
The length of time it takes to recover the initial cost of a project, without regard to the time value of money. of less than one year. The payback actually is even faster because we are collecting about $2,000 each month from the billing program, an amount that should double by year-end as new leases are signed and the billing program becomes better established."
With the success at Alexander House, Pryzant said he decided to invest in a second system for his Sharpstown Apartments, a 395-residence community in Houston. Though per-residence consumption was less than Alexander House, he concluded that submetering has inherent, long-term advantages over an allocation method that may attract prospective residents.
Consumption prior to installing a wireless submetering system at Sharpstown in summer 2002 he said was approximately $564 per day; consumption this year has averaged $436 per day, a savings of $138 per day. Payback on the decreased consumption alone is approximately 20 months. Including revenues from billing and decreased maintenance time, the payback can be calculated at approximately one year, he said.
"Residents who are single who complain they are paying for the water usage of families of three or four have a legitimate concern. Persons living alone are penalized pe·nal·ize
tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es
1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish.
2. for their conservation while families who don't conserve are rewarded."
RPT RPT - Unify. Report Writer Language. Management
Kensington Place Apartments, a 200-apartment home, high-profile, eight-story community located in Cleveland Heights, Ohio Cleveland Heights is a city in Cuyahoga County, Ohio, United States, a suburb of Cleveland. The city's population was 49,958 at the 2000 census. In 2003 the population was estimated at 49,016. , recently installed a radio frequency gas submetering system. The submetering system uses run-time transmitters, a technology that can significantly reduce installation costs for gas submetering systems.
Deborah Bostnar, Property Manager at Kensington, said the run time transmitters have helped save gas, time and money and has been more convenient to administer.
"Our old system was dying," she said. "We were having trouble reading meters and estimating bills in some of our residences. And, we had been having the meters read just once per month. Now, they are read and reported each night, so we can pinpoint if and where there might be any inconsistencies in usage.
"We used to have to take the meters each month and box them up and send them via overnight mail [out of state]. Right there, I'm saving money on postage POSTAGE. The money charged by law for carrying letters, packets and documents by mail. By act of congress of March 3, 1851, Minot's Statute at Large, U. S. 587, it is enacted as follows:
2.-Sec. 1. . Now, the reading is taken electronically. I can call locally each day if I like to find out the readings."
She said the installation was done smoothly. "Our residents did not even realize it had been done," she said. "The only thing different for them is that their gas bill comes with a different letterhead on it."
Platinum Property Management
With the purchase of 84-apartment home Western view Apartments, Chris Creagan, Vice President of Operations for Platinum Property Management, Dublin, Ohio Dublin is a city in Delaware, Franklin, and Union counties in the U.S. state of Ohio. The population was 31,392 at the 2000 census. In 2006, the population was estimated to be 36,565, and Dublin continues to be one of the fastest-growing suburbs of Columbus. , said he discovered a valuable, and increasingly common, solution that also benefits the resident--namely, shifting responsibility for paying the electric bill from owner to resident through submetering.
When energy costs are on the rise, property managers everywhere seek ways to minimize expenses while keeping their residents happy.
Platinum owns and operates seven properties in Indiana and Ohio, totaling 1,700 apartment homes. Located in Chillicothe, Ohio Chillicothe is a city in the U.S. state of Ohio and the county seat of Ross CountyGR6. The municipality is located in southern Ohio along the Scioto River. The name comes from the Shawnee name Chalahgawtha, meaning "principal town. , Western View is the first of its properties to be submetered. When Platinum purchased the property last year, an electric submetering system had just been installed in 84 single- and two-bedroom apartment homes in three buildings.
Typically, electric bills are computed by factoring monthly usage estimates into the rent. However, the submetered apartment homes are direct-billed for their own electrical, eliminating the need to "guesstimate guess·ti·mate
An estimate based on conjecture.
[Blend of guess and estimate.]
guess " consumption.
This is one way electrical submetering can be used to keep rents competitive in tough times. When energy costs recently spiked in California, for example, property owners saw profits shrink as rising utility costs outpaced rent rates. Electrical submetering, on the other hand, can provide a low-cost, accurate and fair means for property owners to put the electrical bill squarely square·ly
1. Mathematics At right angles: sawed the beam squarely.
2. In a square shape.
3. with the consumer.
"Even if you're recovering all the electric utility charges at the end of the year through rent, you may have to raise the rent continuously to do so," said Creagan. "It makes sense for both the landlord and resident to have submeters and direct resident billing."
Moreover, accurately monitoring each apartment home's electrical usage gives greater incentive for residents to conserve energy, since they are paying for exactly what they use. During a one-year period, an average of 17 percent less energy was consumed in the submetered residences at Western View, where residents will continue saving on their energy bill and, ultimately, their rent, which won't be increased to cover rising electric costs due to market fluctuations.
And, with data collected from the submeters, property managers are alerted to potential energy inefficiencies that can be corrected to keep energy costs down in apartment homes, as well as the parking lots, recreation rooms, and other common usage areas.
Submetering Legislation Varies By State
Legislation across the states varies, widely with regard to submetering and RUBS. Some states require that permission must be sought from the Public Utility Commission or the Public Service Commission before installing submeters, Massachusetts altogether prohibits submetering and RUBS.
In Maryland, a state delegate A person who is appointed, authorized, delegated, or commissioned to act in the place of another. Transfer of authority from one to another. A person to whom affairs are committed by another.
A person elected or appointed to be a member of a representative assembly. tried to make the use of RUBS illegal statewide, but the bill failed in the 2003 session. The delegate however, is planning to reintroduce Re`in`tro`duce´
v. t. 1. To introduce again.
Verb 1. reintroduce - introduce anew; "We haven't met in a long time, so let me reintroduce myself"
re-introduce the bill in the 2004 session.
On the other hand, in 2001 the Texas legislature adopted a new law requiring new properties to either be plumbed for submeters, or, in cases in which the water utility offers individual meters, the property must have submeters installed or have individual meters installed during construction of new apartment properties built after Jan. 1, 2003. The law also requires leak audits an installation of water-conserving plumbing fixtures as a condition to adopting billing systems.
Visit the NAA NAA
Nomina Anatomica Avium. Web site, www.naahq.org, for additional information on submetering and RUBS legislation. NAA state and local affiliates also are good resources for regulation updates.
See Govt. Affairs section, click on Issues, click on Environment/Energy and then click on Submetering for details on federal legislation.
2003 Education Conference Recorded Session
For a cassette tape recording of Session B2, "Utility Billing and Your Bottom Line." please see the order form available on page 60-61 of July/August issue of UNITS or call NAA at 703/518-6141.
The National Submetering and Utility Allocation Association has information on its Web site www.nsuaa.org and details about its fourth annual Submetering & Allocation Workshop, which is Feb. 16-19 in Kissimmee, Fla.
National Security Council
Noun 1. NSC - a committee in the executive branch of government that advises the president on foreign and military and national security; supervises the Central Intelligence Agency Members Who Provide Submetering Service
American Water & Energy Savers 800/950-9058 CBSI-Conservation Billing Services 800/884-4885 National Exemption Service 800/896-9925 National Water & Power 800/323-3178 OCIUS 312/850-3500 Sage Water 888/584-9990 U.S. Water Works 800/235-4887 USIEnergy-USI West 888/628-8662 Viterra Energy Services 800/453-6347 WaterMaster America 800/444-9283 Ext. 104
Communicating With Residents
Multifamily property owners agree that one key to a successful submetering and utility billing program is good communication with residents.
* Thoroughly educate and train onsite management on all aspects of submetering and utility billing, including the benefits at both the property and resident level. If they are on board with the program, management will communicate in a positive way with residents.
* Hire a sound billing company to help with resident education and ongoing customer service. Make sure the billing company, onsite management and residents work together to ensure open communication.
* Inform and educate residents about what they can expect from a submetering/utility program on or before move-in.
* Communicate in positive terms with residents. Emphasize that:
a. Submetering is more equitable than including utilities in rents, because residents pay only for their own usage and not their neighbors' waste; b. Submetering promotes water and energy conservation, which benefits the entire community; c. Submetering can prevent rents from escalating; d. Submetering gives residents full control over the temperature inside their apartment--they decide at what temperature their heater or air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. should be set.
* Provide residents with the billing company's toll free number.