BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1035|
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THIRD READING
Bill No: SB 1035
Author: Hancock (D)
Amended: 4/29/10
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 4-1, 4/7/10
AYES: Cox, Kehoe, DeSaulnier, Price
NOES: Aanestad
SENATE JUDICIARY COMMITTEE : 3-1, 4/13/10
AYES: Corbett, Hancock, Leno
NOES: Walters
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : 7-1, 5/10/10
AYES: Kehoe, Cox, Alquist, Leno, Price, Wolk, Yee
NOES: Walters
NO VOTE RECORDED: Corbett, Denham, Wyland
SUBJECT : Municipal utility district: utility charges:
delinquencies
SOURCE : Alameda County
East Bay Municipal Utility District
DIGEST : This bill authorizes a municipal utility
district to collect delinquent fees incurred by a
commercial or residential lessee, tenant, or subtenant by
charging the delinquent fees to the property owner's tax
roll, as specified. This bill deletes a provision of
CONTINUED
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existing law which exempts water and sewer service to
residential property from the lien remedy.
ANALYSIS : Existing law authorizes a municipal utility
district (MUD) to require the owner of record of real
property within the district to pay the charges for
services rendered to a lessee, tenant, or subtenant, and
provides that those delinquent utility charges become a
lien once a certificate is filed with the county recorder,
as specified. The lien has the force, effect, and priority
of a judgment lien. (Section 12811.1(a) of the Public
Utilities Code [PUC])
Existing law provides the lien remedy to MUDs (other than
water, sewer, and electric) in addition to any other remedy
provided by law. (PUC Section 12811.1(d))
Existing law provides that this code section does not apply
to MUDs providing water or sewer services to residential
properties, or electric services. (PUC Section 12811.1(e))
There are five MUDs statewide: East Bay, Lassen,
Sacramento, South Placer, and Southern San Joaquin. MUDs
can provide various utility services, including
electricity, water, sewer, garbage disposal,
transportation, and communications. Currently, only East
Bay MUD (EBMUD) and South Placer MUD provide sewer service,
and (only) EBMUD also provides water service.
This bill authorizes an MUD, pursuant to a resolution or
ordinance, to collect delinquent utility fees, tolls,
rates, rentals, and other charges, together with interest
and penalties, including any delinquent fees, tolls, rates,
rentals, or other charges for services rendered to a
lessee, tenant, or subtenant, on the tax roll in the same
manner as property taxes.
This bill deletes the above exemption for delinquent fees
or charges for the furnishing of water or sewer services to
residential properties.
This bill requires an MUD seeking to apply delinquent
utility charges to the tax roll to (1) prepare and file an
annual report of delinquent charges for each affected
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parcel, (2) give published and mailed notice of the filing
of the report and the time and place for a public hearing,
(3) require the MUD to hear and consider objections or
protests of the report at the public hearing and
potentially revise the report, and (4) by August 10 of each
year, provide a final report to the county recorder to be
added to the current tax assessment roll.
This bill authorizes the MUD to recover any delinquent
fees, tolls, rates, rentals, or other charges, together
with interest and penalties thereon, including any
delinquent fees, tolls, rates, rentals, or other charges
for services rendered to a lessee, tenant, or subtenant.
This bill requires the MUD to file a release of the lien
within 30 days of receipt of payment of the delinquent
charges.
This bill requires the MUD to reimburse the county for the
reasonable expenses incurred by the county under this bill.
This bill provides that the remedies in this bill are
cumulative, and the district may pursue the remedies
alternatively or consecutively.
Background
This bill is similar to AB 1333 (Hancock), 2007-08 Session,
which, among other things, would have deleted the exemption
of an MUD providing water or sewer services to residential
property and allowed this type of MUD to place a lien on a
property for delinquent fees or charges. The bill was
vetoed. The Governor's veto message expressed his concern
that allowing utility liens against property owners for
water and sewer services could increase costs associated
with foreclosed property and allow utility companies to
benefit at a time of financial hardship for many property
owners. AB 1035 is narrower than AB 1333.
When water bills are not paid, MUDs, such as EBMUD, are
forced to either shut off water service or subsidize the
cost of continued water service by charging more for water
services to other ratepayers. When water is not available
to maintain landscaped exteriors, neighborhoods begin to
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take on an unlived, blighted appearance, which in turn
causes property values to decline. To respond to the
problem of water shutoffs and resulting blighted areas,
this bill will authorize water and sewer MUDs, which are
currently exempt from this remedy, to file a lien against
the property owner for their lessee, tenant, and subtenant
delinquencies. All MUDs, excluding electric, will also be
able to place the delinquent utility charges on the real
property tax roll.
Although other utility providers already can impose a lien
on property owners for delinquent utility fees, municipal
utility districts providing water, sewage, and electric are
unable to utilize this statutory remedy. This bill deletes
the exemption of residential water and sewage providers,
thereby allowing them to pursue this remedy.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
County recorders have fee authority under existing
statutes, and currently charge fees for virtually all
recordation services. This bill specifically allows county
recorders to charge fees to cover their costs (as they do
for all lien recordation), and does not present a
reimbursable mandate.
SUPPORT : (Verified 5/11/10)
Alameda County (co-source)
East Bay Municipal Utility District (co-source)
California Special Districts Association
Coalition of California Utility Employees
Oakland Metropolitan Chamber of Commerce
ARGUMENTS IN SUPPORT : The author writes:
"Blight is becoming a more significant problem in the
East Bay Municipal Utility District's (EBMUD) 331-square
mile service area in the East San Francisco Bay.
Blighted properties can lower the value of nearby
properties, decrease the safety and livability of
communities and impact area businesses.
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"Maintaining landscaped exteriors can help keep blight at
bay by giving properties a vibrant 'lived in' look. A
well-maintained exterior is an excellent deterrent to
crime and helps maintain the value of neighboring
properties.
"On-going water service is necessary to keep exteriors
vibrant. However, unlike many water utilities that have
the authority to record a lien on a property when water
bills are not paid, EBMUD cannot. When water bills are
not paid, EBMUD has no option but to terminate water
service to the property or unfairly ask its other
ratepayers to subsidize the cost of service to the
delinquent account holders.
"A change in law is needed to provide EBMUD with same
authority already vested with other water utilities in
the state to record a lien for nonpayment. A lien places
the obligation for payment on the responsible party
without unduly penalizing other ratepayers."
The sponsors of this bill argue that it will enable local
residents and EBMUD to work together to keep communities
vibrant and stable and enable water and sewer MUDs to have
access to the same tools that other local utility providers
use in the case of delinquent accounts.
AGB:mw 5/12/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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