A Proactive Utility Compliance Strategy

Colorado's recent housing legislation, House Bill 25-1090, has fundamentally changed the risk profile for rental property utility billing, specifically targeting practices like the Ratio Utility Billing System (RUBS).

As a management partner, our goal is to turn this legislative challenge into a stable, legally sound operating environment for your assets. The risk of waiting for legal clarity is simply too high, as non-compliance exposes owners to severe penalties and expensive class-action litigation.

Here is the mandatory, strategic response we are enacting across our managed portfolio to ensure complete legal compliance and protect investor interests.

Our Calculated Defense Strategy

We are restructuring how we present rent and utility costs to remove the immediate legal liability while stabilizing cash flow. This strategy involves three key steps:

1. Deep-Dive Utility Cost Analysis: We have completed a detailed, 12-month analysis of utility expenses for every unit type across our portfolio to determine a precise, defensible average cost.

2. Immediate Elimination of Separate Utility Charges: Effective immediately for all new and renewing leases, we are formally removing all separate utility charges (RUBS fees, trash fees, administrative charges, etc.) from the lease agreement.

3. Base Rent Adjustment for Compensation: The base monthly rent will be adjusted to absorb this utility cost. We are setting this increase at a rate slightly below the actual average utility expense.

This small, tactical reduction provides a clear, documented benefit to the tenant, which is a powerful defense that reinforces the fairness and compliance of the new structure.

The Immediate Financial and Legal Threat

We cannot overstate the necessity of this transition. The penalties outlined in HB25-1090 are punitive and multiply rapidly:

• Statutory Fines: A single violation of deceptive pricing can trigger a fine of up to $1,000 per person, per violation. If an improper fee is billed monthly, these penalties compound exponentially.

• Mandatory High-Interest Refunds: Owners could be required to refund every improperly charged fee, plus a massive 18% annual interest compounded.

• Class-Action Litigation: Properties risk facing lawsuits demanding three times the actual damages, plus full attorney and court costs. Our strategy is designed to immediately eliminate this existential risk.

Why This Strategy Works for Marketing and Operations

Legal Compliance Creates a rock-solid, fully compliant legal posture that is easy to defend.

Stable NOI By absorbing costs into the base rent, we stabilize your Net Operating Income and eliminate fluctuations from utility billing.

Marketing Transparency The rent we advertise is the final, all-inclusive figure, meeting legal transparency rules perfectly.

Our View on the Future Regulatory Landscape

This maneuver is a necessary, temporary defense strategy. We believe the law's true intent was to stop deceptive pricing and "junk fees," not necessarily to outlaw all utility pass-throughs.

We are highly engaged and monitoring legislative movements. We anticipate potential amendments or clarifying guidance that could create a new, safe path for RUBS in the future. Should a legally sound path for utility pass-throughs emerge, we will immediately re-evaluate and advise on reverting to that model.

Partner with Us for Compliance

Navigating complex legislation like HB25-1090 requires immediate, decisive action grounded in legal compliance. We are committed to protecting your investments and ensuring your properties operate seamlessly within the current regulatory environment.

Contact Bergan and Company Team Today