BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 120| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 120 Author: Lowenthal (D), et al Amended: 8/24/09 Vote: 21 SENATE JUDICIARY COMMITTEE : 3-2, 3/31/09 AYES: Corbett, Florez, Leno NOES: Harman, Walters SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 23-14, 4/23/09 AYES: Alquist, Calderon, Cedillo, Corbett, Correa, DeSaulnier, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal, Negrete McLeod, Oropeza, Padilla, Pavley, Romero, Simitian, Steinberg, Wiggins, Wolk, Wright, Yee NOES: Aanestad, Ashburn, Benoit, Cogdill, Cox, Denham, Dutton, Hollingsworth, Huff, Maldonado, Runner, Strickland, Walters, Wyland NO VOTE RECORDED: Ducheny, Harman ASSEMBLY FLOOR : 47-29, 09/01/09 - See last page for vote SUBJECT : Residential utility service SOURCE : Western Center on Law and Poverty DIGEST : This revises existing public utility termination notice provisions, which currently apply only to the multi-unit residential tenancies, to any residential CONTINUED SB 120 Page 2 structure, including a single-family dwelling. Assembly Amendments narrowed the scope of the bill. As it left the Senate, this bill would have clarified that lenders foreclosing on rental properties are responsible for the return of tenant security deposits. Recent federal legislation (S. 896) signed into law in May now provides that foreclosers assume properties subject to the rights of any bona fide residential tenants. Thus, under federal law, foreclosers are obligated to maintain properties in a habitable condition, return deposits, and perform all the other obligations required of landlords under state law. Tenants, for their part, are required to pay rent and follow the terms of the existing lease or rental agreement. The new federal law pre-empts state law and makes the clarifications contained in this bill unnecessary. Therefore, those sections were removed from the bill with the following amendments: (1) deleted provisions defining landlord and tenant for purposes of governing tenancies relating to, among other things, mortgage defaults, (2) deleted provisions revising the governing of the transfer or return of any security, (3) deleted definition of "successor owner," (4) add provisions amending the Public Utilities Act relative to individually or master metered residential service in single family and multi-unit facilities, (5) requires notice to tenants in arrears be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean, and (6) added a coauthor. ANALYSIS : Existing law: 1.Requires any corporation, public utility, or district that provides electrical, gas, heat, or water services to residents in a multi-unit residential structure, mobilehome park, or labor camp to make good faith effort to inform residential occupants of any intent to terminate services, as specified depending upon whether the units single- or mastered-units. 2.Permits a residential occupant of a multi-unit dwelling to assume responsibility for paying service charges from a public utility, corporation, or district, as specified, and to deduct those charges from any rent owed if the SB 120 Page 3 services are supposed to be included in the rental price. 3.Provides that any person engaged in a trade or business, who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into a rental or lease agreement, shall deliver to the other party a translation of the agreement in the language in which the agreement was negotiated. 4.Provides, under the federal "Protecting Tenants at Foreclosure Act of 2009," signed by President Obama on May 20, 2009, that, in the case of foreclosure on a federally-related mortgage loan, or on any dwelling or residential property after the date of enactment, the successor in interest shall: a) give any bona fide tenant on the affected property at least 90 days notice to vacate; and, b) take the property subject to the rights of any bona fide tenant. 5.This provision will sunset on December 31, 2012. This bill: 1.Provides that whenever a corporation that furnishes electrical, gas, heat, or water services to any residential occupants, if the owner, manager, or operator of the residential unit is listed by the corporation as the customer of record, the corporation must make every good faith effort to inform the residential occupants, by means of a specified written notice, when the account is in arrears, that service will be terminated at least 10 days prior to the termination, except as specified. The notice shall provide residents with specified information regarding steps that they may take, including a statement of the residents' right to obtain the utility service in their own name and assume responsibility for payment of any subsequent charges. Specifies that notice must be in English, Spanish, Chinese, Tagalog, Vietnamese, and Korean. 2.Applies the same provisions described above whenever a public utility or district provides light, heat, water, or power to residential occupants, including a single SB 120 Page 4 family dwelling, if the owner, manager, or operator of the residential unit is listed by the public utility or district as the customer of record. 3.Permits a tenant of any residential dwelling to assume responsibility for payment for utility services provided by a corporation, public utility, or district and to deduct utility charges from any periodic rent owed, if the rent amount includes charges for utility services. Prior Legislation AB 2586 (Torrico, 2008), would have enacted a substantially similar set of tenant protections. This bill was vetoed. AB 1333 (Hancock, 2008), would have provided that the legal owner of real property must pay the utilities provided to a property or its tenants following a foreclosure under specified circumstances. This bill was vetoed. SB 1137 (Perata, Corbett, Machado), Chapter 69, Statutes of 2008, provided, among other things, that tenants of foreclosed properties receive notice that their home is in foreclosure, and receive a 60-day notice to quit, as specified. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, minor absorbable costs to the PUC for enforcement of the bill's requirements with regard to the investor-owned utilities. SUPPORT : (Verified 9/2/09) Western Center on Law and Poverty (source) Asian Americans for Civil Rights & Equality California Alliance for Retired Americans California Rural Legal Assistance Foundation FamiliesFirst StoneSoup Tenants Together East Bay Municipal Utilities District SB 120 Page 5 ARGUMENTS IN SUPPORT : According to the author's office, "SB 120 addresses an often overlooked aspect of the current mortgage foreclosure crisis: an increase in the number of innocent renters who unexpectedly lose their utility services as a result of foreclosure on a rented property. "Landlords of distressed properties are sometimes unable to pay utility bills that they agreed to pay, and shut-offs occur. Existing law allows tenants in multi-family dwellings to begin service in their own names and deduct payment from the amount of rent owed to the landlord. This bill would extend the current provisions to tenants living in single-family homes and condominiums, because these are the types of rentals most often affected by foreclosure. The bill also requires that utilities must provide written shut-off notices for tenants in all rental properties, not just multifamily rental property, and it requires that the notices in the six most common languages used in California. These changes in law will ensure that tenants in a foreclosed property will not unfairly be denied utility services." ASSEMBLY FLOOR : AYES: Arambula, Beall, Block, Blumenfield, Brownley, Caballero, Carter, Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jones, Krekorian, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, John A. Perez, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Skinner, Solorio, Swanson, Torlakson, Torres, Torrico, Yamada, Bass NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill, Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson, Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman, Harkey, Jeffries, Knight, Logue, Miller, Nestande, Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran, Villines NO VOTE RECORDED: Ammiano, Buchanan, Charles Calderon RJG:nl 9/2/09 Senate Floor Analyses SB 120 Page 6 SUPPORT/OPPOSITION: SEE ABOVE **** END ****