Colorado Spent a Year Deciding If Splitting a Water Bill Is a Junk Fee. Here's the Answer.
In 2025, Colorado passed a price transparency law aimed at hidden rental fees. It was popular with tenant advocates and straightforward in intent: landlords have to disclose the real, all-in cost of renting instead of burying junk fees in the lease. Then property managers who split a shared water or trash bill across units by square footage or occupancy, a common practice called ratio utility billing (RUBS), started asking a basic question nobody could answer cleanly: was that now a banned fee too?
Colorado's Attorney General issued informal enforcement guidance in November 2025 saying it wouldn't pursue RUBS landlords who met certain conditions, but that wasn't the same as a statute saying RUBS was legal. Landlords, law firms, and multifamily trade groups spent months in that gap. The legislature closed it on March 26, 2026, when the governor signed HB26-1013, a bill the legislature declared necessary for the immediate preservation of public health and safety, which is why it took effect the day it was signed instead of waiting until later in the year.
What the fix bill actually says
HB26-1013 amends the original price transparency statute (C.R.S. § 6-1-737) to say, in plain terms, that the law does not prohibit landlords or their agents from allocating utility costs among tenants using a ratio system. But "allowed" comes with conditions. A landlord using RUBS now has to clear all four:
- The total amount billed to every tenant combined cannot exceed what the utility provider actually charged for the whole property. No rounding up, no building in a cushion.
- No fee or charge on top of the actual utility cost. The allocation has to pass through the real bill, not a marked-up version of it.
- Utility costs tied to common areas or shared facilities (the leasing office, the pool, hallway lighting) have to come out of the pool before it's split across tenants. Only usage tied to the units themselves gets allocated.
- The allocation method has to be clearly and conspicuously disclosed in the lease or a lease addendum. A tenant should be able to read the lease and understand how their share gets calculated, not find out when the bill arrives.
There's a second piece worth flagging for anyone building or renovating: residential properties that apply for a building permit on or after July 1, 2027 have to be metered directly by the utility provider or by a submeter. RUBS stays available for existing buildings, but new construction is being pushed toward individual metering over time.
Why a Colorado fix bill matters outside Colorado
Colorado isn't alone in writing junk-fee rules into rental law this year. Illinois passed its own rental fee transparency bill, several other states have introduced versions, and the FTC's junk fee rule has already pushed this question into property managers' inboxes nationwide. The pattern is consistent: a transparency law gets written broadly enough to sweep in a routine billing practice nobody meant to ban, and the industry finds out the hard way that "allocate utility costs" and "charge a hidden fee" look identical on paper if the lease doesn't spell out the method.
That's the actual risk here, even for a property manager who's never heard of HB26-1013: if your lease doesn't clearly disclose how you calculate a utility allocation, you're exposed under a transparency theory whether or not your state has passed Colorado's exact bill. The four conditions above are a reasonable checklist to run against your own leases regardless of jurisdiction, because they describe what a regulator or a tenant's attorney is going to ask for first: does the math add up to the real bill, is there a markup, is common-area cost excluded, and is the method written down somewhere the tenant actually signed.
Where this turns into real work
The mechanical part of this is tedious in a way that's easy to let slide: pulling every lease and addendum for a property, checking whether the utility allocation clause exists and is current, comparing a sample month's tenant charges against the actual utility invoice, and flagging any unit where the math doesn't reconcile. That's exactly the kind of multi-step document review an AI agent can do across a portfolio in a sitting, flagging the leases missing a disclosure clause or the months where billed totals ran over the actual invoice, so a property manager reviews a short exception list instead of every lease in the file. The agent reads and proposes; a person still decides what gets fixed and signs off before anything changes in a tenant's bill or lease.
If you manage property in Colorado, the immediate task is confirming your billing vendor's allocation method matches what your leases disclose. If you manage anywhere else, treat this as the preview of a question your own state is increasingly likely to ask. Our property management page covers how we set these kinds of document and compliance checks up as a running workflow, and how it works walks through the human-approval step on anything that touches a tenant's bill.
Sources: Colorado General Assembly, HB26-1013 bill page; Holland & Knight, "Existing Colorado Multifamily Housing Developments Can Continue Using RUBS Under New Law"; Denver7 Investigates.