BILL ANALYSIS 1
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Darrell Steinberg, Chair |
| 2007-2008 Regular Session |
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BILL NO: SB 1518 HEARING DATE: April 8, 2008
AUTHOR: Correa URGENCY: No
VERSION: April 2, 2008 CONSULTANT: Dennis O'Connor
DUAL REFERRAL: Rules FISCAL: Yes
SUBJECT: Water charges, meters, and submeters: multiunit
residential structures.
BACKGROUND AND EXISTING LAW
The Water Measurement Law requires every water purveyor to
require, as a condition of new water service on and after
January 1, 1992, the installation of a water meter to measure
water service. That law also requires urban water suppliers to
install water meters on specified service connections, and to
charge water users based on the actual volume of deliveries as
measured by those water meters in accordance with a certain
timetable.
PROPOSED LAW
This bill would create a new chapter in the Water Code titled
Multiunit Residential Structures. Specifically, this bill
would:
1.Require that all rental units in any multiunit housing ready
for occupancy after January 1, 2012, be individually metered
or submetered. This requirement does not apply to high-rise
structures with plumbing configurations that have multiple
points of entry that make the installation of submeters
infeasible.
2.Allow the owner or operator of the multiunit residential
structures to charge tenants for water service based on the
actual volume of water delivered to the unit as measured by
the installed meter or submeter.
3.Allow the owner or operator of a multiunit residential
structure without water submeters to charge building tenants
separately for the costs of water service based on an
allocation formula that reflects the square footage of the
unit, the number of tenants of record residing in the unit, or
the square footage of the unit and the number of tenants of
record residing in the unit.
The allocation formula may include the actual volume of
water delivered to the unit as measured by a meter or
submeter installed to measure a portion of the water,
including, but not limited to, hot water heaters, where
appropriate.
The allocation formula may not include the costs of
water used for the common areas of the property, including,
but not limited to, water used for landscaping, swimming
pools, and other recreation areas.
If the common areas of the multiunit residential
property are not individually metered or submetered for
water service, the multiunit residential property owner or
operator, prior to allocating charges to the tenants for
water service, or water and sewer service, as applicable,
shall do either of the following:
Deduct a minimum of 25 percent from the total
property water bill.
Deduct a percentage from the total property water
bill as determined by an independent water audit
performed by a local water agency.
The rent charged for the residential rental unit may not
include any separately billed water charges, or water and
sewer charges.
These provisions do not apply to any assisted housing
development that is subject to specific rent restriction
programs.
ARGUMENTS IN SUPPORT
According to the California Association of Realtors, "Existing
law states the Legislature's intent to limit the waste of water
by encouraging the installation of water meters in multifamily
housing to encourage tenants to conserve water. This bill will
go a long way to achieving this goal in newly constructed
multifamily housing. It will further provide landlords with a
fair and effective method to encourage water conservation in
existing units that are not individually metered by permitting
tenants to be separately billed for their water usage based on
an allocation formula. Dividing the water bill amongst all
tenants on a property is an existing industry standard so it
makes sense to codify the practice to a statewide standard."
ARGUMENTS IN OPPOSITION
The Western Center on Law & Poverty raises a number of concerns.
"Ultimately, the best practice of course, is to equip each
rental unit with an individual meter, so that each family's
water use is accurately and fairly determined by the purveyor of
the water."
"However, installing meters/sub-meters in new buildings and then
billing is not the end of the problem. Landlords must be
required to promptly address leaks and other plumbing problems.
Some landlords might not be motivated to repair a wasteful leak
if they are not paying for the water wasted."
"If future rental units are sub-metered rather than individually
metered, we not only need to ensure that plumbing problems are
quickly addressed, but also ensure that any billing done by the
landlord (or an agent) is done fairly, with proper notice, and
will not result in excessive monthly charges, late charges, or
evictions. It must be a transparent process that the tenant is
entitled to examine."
"Our strongest concerns, however, center on the bill's
provisions that permit the allocation of the water bill amongst
all of the rental unites, without regard to individual usage.
This rough allocation is commonly known as 'RUBS'."
"Most of our low income clients live in older rentals which have
no individual metering, and retro-fitting can be problematic.
Thus, landlords will be utilizing the least fair system - RUBS -
on the poorest tenants. We are meeting with the sponsor to
address our concerns, including amendments that would prohibit
charging tenants a monthly fee for billing allocations of the
building's collective water bill. This task does not justify
the high monthly charges that have been reported by some
tenants."
"It is worth noting that some studies show that a RUBS system
actually increases water consumption. We believe it may be
possible to craft a RUBS scheme that would allow landlords and
tenants to cooperate in order to reduce water consumption, but
we are stilling for that answer."
COMMENTS
Types of Billing Systems. Owners/operators of multiunit
residential structures typically cover the water utility costs
through one of four methods:
In-rent - the owner does not separately bill residents for
water and wastewater.
Submetering - metering that occurs downstream of a water
utility master meter.
Hybrid metering, sometimes referred to as "hot water hybrid" -
billing systems where only a portion of the water, such as the
hot water consumption or occasionally the cold water
consumption, for each unit in a multi-family dwelling is
measured. This information is then typically used to
extrapolate the total water bill.
Ratio utility billing systems (RUBS) - systems that use an
allocation formula to estimate water consumption for each unit
in a multi-family dwelling. RUBS systems are not based on the
actual consumption at each unit, rather individual bills are
prorated from the overall utility master meter bill based on
one or a combination of quantitative measures such as square
footage, number of occupants, or number of fixtures.
Billing Systems and Water Conservation. In 2004, the National
Multiple Family Submetering And Allocation Billing Program Study
was published. This report was the result of a more than three
year effort in cooperation with the EPA, two national apartment
associations, and 10 water utilities. The principle purpose of
the study was to determine the water savings potential in the
multi-family sector resulting from both direct metering and
allocation programs. Other important objectives were to:
Understand the current regulatory framework governing separate
billing programs across the U.S.,
Access the current business practices in the billing service
companies (read and bill industry),
Draw conclusions from the findings, and
Make recommendations that offer consumer protection, provide
ethical business practices for the industry, and capture
cost-effective water savings.
The study found that submetering achieved statistically
significant water savings of 15.3 percent (21.8 gal/day/unit)
compared with traditional in-rent properties. Conversely, the
study found no evidence that RUBS reduced water use by a
statistically significant amount compared with traditional
in-rent arrangements. (The sample of hot water hybrid
properties was too small to produce reliable results that can be
generalized to the broader population.)
Guiding Principles for Submetering and RUBS Billing Programs .
The National Study recommended six guiding principles for
submetering and RUBS billing programs. They are:
1.Submetering is a practice that offers documented water
savings. As such, submetering should be fostered by public
policies seeking to encourage water savings, together with
appropriate measures to protect the consumer.
2.RUBS is a practice lacking statistically reliable water
savings, while offering both similar and distinctive drawbacks
compared with submetering. As such, RUBS implementation should
be carefully bounded by public policy.
3.Any water and wastewater billing system - whether submetering,
RUBS, or various hybrid systems - will reduce a multi-family
property owner's incentive to invest in in-unit plumbing
efficiency upgrades in pre-1995 structures. The initiation of
any separate billing system in pre-1995 dwellings should be
coupled with complete plumbing fixture upgrades within a
specified time period.
4.The potential drinking water quality issues that may arise
within the water systems of multi-family properties - such as
backflow, cross-connection, metal uptake, and deterioration of
buried distribution lines - should be approached with
solutions that address all properties with comparable
vulnerabilities, rather than narrowly focusing on properties
that implement a water and wastewater billing program.
5.Best Management Practices for the billing of water and
wastewater in multi-family housing should be implemented by
the appropriate regulatory agency to ensure consumer
protection for property owners and residents and to promote
adoption of multi-family submetering.
6.Submetering equipment manufacturers, professional installers,
third-party billing services, and owners should be held to
reasonable standards of accuracy, reliability, and
professional competence and conduct.
Many Unresolved Questions. This bill raises many issues that
are not clearly addressed. For example, under this bill:
The new meter requirements would apply to all rental units in
multiunit residential structures. While it would clearly
apply to apartments, it is not clear whether the requirements
would apply to college dormitories. It is also not clear if
the requirements either do or should apply to condominiums,
mobile home parks, or permanent residential structures in
labor camps.
The bill would allow the owner/operator of the multiunit
residential structures to charge based on the actual volume of
water delivered to the unit as measured by the installed meter
or submeter. It is not clear why this isn't mandatory.
The new meter requirements would not apply to high-rise
structures (those over 75 feet) with plumbing configurations
that make the installation of submeters infeasible. It is not
clear who determines whether or not the installation of
submeters infeasible.
The allocation formula may reflect the square footage of the
unit, the number of tenants of record residing in the unit, or
the square footage of the unit and the number of tenants of
record residing in the unit. It is not clear how one would
determine which approach would provide an equitable
appropriate allocation formula for any given multiunit
residential structure.
If the common areas of the multiunit residential property are
not individually metered or submetered for water service, the
owner or operator shall either deduct 25 percent from the
total property water or deduct a percentage from the total
property water bill as determined by an independent water
audit performed by a local water agency. It is not clear
under what circumstances a simple 25 percent reduction would
be superior to the water audit approach.
Some charter cities, such as the City of Santa Monica, have
charter provisions governing allowable rents and allowable
charges to tenants. The new chapter created by this bill does
not include provisions extending its application to charter
cities, and so to the extent that this bill would conflict
with such charter provisions, the charter provisions would
likely prevail. However, it is not clear how this law would
affect such ordinances adopted by general law cities, such as
Beverly Hills.
SUGGESTED AMENDMENTS: None
SUPPORT
California Apartment Association (Sponsor)
American Federation of State, County and Municipal Employees
California Association of Realtors
OPPOSITION
Western Center on Law & Poverty