Existing Colorado Multifamily Housing Developments Can Continue Using RUBS Under New Law

The Colorado legislature in 2025 passed House Bill (HB) 25-1090, a sweeping price transparency law codified at Section 6-1-737 of the Colorado Revised Statutes. Among its provisions, the law restricted what charges landlords could pass on to tenants, including those related to utilities. Though the law was aimed at eliminating hidden fees and promoting transparency in residential leasing, it created significant uncertainty for Colorado's housing industry – particularly for the thousands of housing providers that rely on Ratio Utility Billing Systems, commonly known as "RUBS." RUBS is a method of allocating a property's total utility costs among tenants based on a proportional formula, often tied to unit square footage, occupancy or other objective metrics.

After the passage of HB 25-1090, questions arose as to whether the law effectively prohibited or curtailed the use of RUBS because the allocated amount a tenant pays under such a system is not a direct charge from the utility provider for that individual unit. Following a request from Holland & Knight, the Colorado Attorney General's office issued a memorandum in November 2025 stating that it will exercise its enforcement discretion and not pursue legal actions against landlords who allocate utility costs using RUBS, provided that certain conditions are met.

The Clarification: House Bill 26-1013

In response to the confusion generated by HB 25-1090, the Colorado General Assembly recently passed HB 26-1013, which directly addresses and resolves the ambiguity surrounding RUBS. The new legislation amends Section 6-1-737 of the Colorado Revised Statutes to make clear that the price transparency law does not prohibit landlords or their agents from allocating utility costs among tenants of the same residential premises using a form of RUBS.

To ensure that this clarification does not come at the expense of consumer protection, HB 26-1013 establishes several important guardrails that landlords must follow when using RUBS:

• No Overbilling. The aggregate amount billed to all tenants of a residential property must not exceed the total amount charged by the utility provider for service to the entire premises. In other words, landlords cannot bill tenants more in total than what the utility company charges for the entire property.
• No Unpermitted Markups or Surcharges. Landlords and their agents are prohibited from applying any markup, surcharge, administrative fee or other amount in excess of the actual charges from the utility provider except as otherwise permitted by law. In other words, landlords are instructed to follow the existing law that no markup can exceed 2 percent or $10 but not both.
• Exclusion of Common Area Costs. Utility costs attributable to common areas or shared facilities at the residential premises must be excluded from any tenant allocation.
• Lease Disclosure Requirements. Landlords must clearly and conspicuously disclose the method of utility allocation for the dwelling unit in the tenant's rental agreement or an addendum to that agreement.

The legislation also includes a forward-looking provision: For new residential premises applying for permits on or after July 1, 2027, gas, electric and water utility service must be metered directly by either the utility provider or a submeter. This means that while RUBS remains a viable option for existing properties, new construction will be expected to incorporate individual metering infrastructure over time.

Current Status and Effective Date

HB 26-1013 passed both chambers of the Colorado General Assembly and was approved by the Gov. Jared Polis on March 26, 2026. The General Assembly declared the act necessary for the immediate preservation of the public peace, health or safety, which means the legislation took effect on the governor's signature. Housing providers and property managers should take steps now to ensure their RUBS practices and lease disclosures conform to the new requirements.

Holland & Knight's Role

Holland & Knight played an active role in advocating for this important legislative clarification on behalf of the housing industry. Attorneys worked closely with stakeholders and lawmakers to ensure that the final legislation struck the appropriate balance – preserving the legitimate use of RUBS as a fair and practical utility allocation tool. Holland & Knight's real estate and government affairs teams continue to monitor legislative and regulatory developments in Colorado and stand ready to help clients navigate compliance with HB 26-1013 and related housing laws.

For more information or questions, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.