BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 741 HEARING: 6/8/11
AUTHOR: Huffman FISCAL: No
VERSION: 4/11/11 TAX LEVY: No
CONSULTANT: Weinberger
VOLUNTARY LIENS FOR SEWER LATERALS
Allows local sewer service providers, at a property owner's
request, to construct sewer improvements on private
property and charge the property owner for the costs.
Background and Existing Law
Under the Community Facilities Law of 1911, cities,
counties, and special districts may charge sewage
connection fees.
At the request of a property owner whose property is
included within an assessment district for the construction
of sewer lines, the governing board of any local government
that is authorized to acquire, construct, maintain, and
operate sanitary sewers and sewerage systems may construct
all necessary plumbing to connect the property to the
adjoining street public sewer system (AB 2577, MacDonald,
1973). The person employed by the governing board to do
the work has a lien upon the property, for work done and
materials furnished. The work done and materials furnished
are deemed to have been done and furnished at the request
of the property owner. The governing board may pay some or
all of the cost or price of the connection to the person or
persons who furnished labor, materials, or equipment. If
the governing board pays the cost or price of the
connection, it succeeds to and has all the rights,
including the lien, of the person or persons against the
property and the property owner.
Alternatively, the governing body may, by an ordinance
approved by two-thirds vote of its members:
Fix the cost of improvement for connection to the
sewer facilities,
Fix the times at which such costs are due,
Provide for the payment of the costs prior to the
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construction and connection or in installments over a
period, not to exceed 15 years,
Provide the interest rate, not to exceed 6%,
charged on the unpaid balance, and
Provide that the amount of the costs and the
interest shall constitute a lien against the parcels
on which facilities are constructed.
By ordinance approved by two-thirds vote, the members of a
local legislative body may:
Fix fees or charges for the privilege of connecting
to its sewer facilities constructed by the entity
Fix the time when the fees or charges are due,
Provide for the payment of the fees or charges
prior to connection or in installments over a period
of not to exceed 30 years,
Provide the interest rate, not to exceed 12%, to be
charged on the unpaid balance, and
Provide that the amount of the fees or charges and
the interest are a lien against the parcels of land to
which the facilities are connected.
(AB 2888, Cloyed, 1953)
Before making the fees or charges a lien against the land,
the legislative body must notify the property owners and
must include:
The schedule of fees or charges to be imposed.
A description of the property subject to the fees
or charges.
The time at which the fees or charges are due.
The number of installments in which the fees or
charges shall be payable.
The interest rate, not to exceed 12%, to be charged
on the unpaid balance.
That the fees or charges and interest will become
a lien against the parcels to which the facilities are
furnished.
The time and place of the public hearing at which
persons may present objections regarding the
imposition of the fees or charges as a lien.
Local officials want to use these statutes to help property
owners finance the costs of repairing or replacing sewer
laterals or converting a property from a septic system to a
sewer system.
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Proposed Law
Assembly Bill 741 authorizes an entity to use procedures in
specified statutes, whether or not an order or other action
has been issued or taken for an abatement of contamination
created by sewage disposal, to either :
Convert properties from onsite septic systems and
connect them to a sewer system, or
Replace or repair existing sewer laterals
connecting pipes to a sewer system.
The specified statutes:
Allow a property owner to request an entity's
governing board to construct all necessary plumbing to
connect property to the adjoining sewer system,
Detail the procedures by which an entity can charge
the property owner for the costs of construction, and
Require that the amount of the costs and interest
constitute a lien against the property.
AB 741 defines an "entity" as a county, city and county,
city, sanitary district, county sanitation district, county
service area, sewer maintenance district, and any other
public corporation and district authorized to acquire,
construct, maintain, and operate sanitary sewers and
sewerage systems.
The bill specifies that septic-to-sewer conversion
improvements and costs may include, pipes, pumps and other
equipment, septic system abandonment, and associated sewage
treatment capacity. The bill also specifies that the cost
of lateral replacement or repair shall constitute the cost
of an improvement for connection to a sewer system.
AB 741 specifies that the term "assessment district," as
used in statutes referenced in the bill, also means an
improvement district or any other area served by the
entity's sewer collection system. The bill specifies that
the term "ordinance," as used in statutes referenced in the
bill, also means a resolution.
AB 741 declares that its authority is in addition to, is
not in derogation of, and does not affect, any authority
granted by other law relating to recovering the cost
incurred by an entity for connecting properties to the
public sewer system, or the entity's exercise of powers
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pursuant to any other law. The bill is deemed to provide a
complete and supplemental method for exercising the powers
authorized by this section, and is deemed supplemental to
the powers conferred by other applicable laws.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Antiquated or damaged sewer
laterals or septic systems can leak sewage into the ground,
harming the environment and threatening public health.
Faulty sewer laterals can allow excessive infiltration and
inflow of groundwater and stormwater into the lateral,
leading to spills and backups into homes, streets, and
watersheds. Faulty septic systems can contaminate surface
waters and groundwater with pathogens and nitrates. The
improvements required to correct these problems are costly.
A sewer lateral replacement may cost between $1,500 and
$4,000. The estimated cost of converting from a septic
system to a sewer connection ranges from $2,000 to $14,000.
Because commercial loans for sewer and septic
improvements can be expensive, local officials want to
accelerate upgrades to sewer and septic systems by loaning
money to private property owners at below-market interest
rates. AB 741 provides local officials with another tool
to help property owners pay for sewer upgrades that protect
water quality and public health.
2. Conform . The statutes referenced by AB 471 contain
different limits on the interest rate that can be charged
for the unpaid costs of constructing sewer connections and
specify different repayment periods. In 1973, when it was
enacted, the MacDonald bill's 6% maximum interest rate and
15 year maximum repayment period matched the interest rate
and repayment period specified in the statute enacted by
the 1953 Cloyed bill. Legislators subsequently raised the
maximum interest rate to 12% (AB 1341, Cortese, 1985) and
the repayment period to 30 years (SB 1124, Senate Local
Government Committee, 2008) in one statute, but not in the
other. The Committee may wish to consider amending AB 471
to conform the statutes by changing the interest rate and
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repayment period specified in Health and Safety Code §5464
to 12% and 30 years, respectively.
3. Related legislation . AB 741 is related to AB 2182
(Huffman, 2010), which authorized the use of contractual
assessments to finance the installation of onsite sewer and
septic improvements on private property. Governor
Schwarzenegger vetoed AB 2182, stating that he did not
support expanding contractual assessment programs to
include sewer improvements. By building upon existing
statutes that authorize sewer agencies to connect private
property to a sewer at a property owner's request and
recover the costs through the property tax bill, AB 741
takes a different approach to providing public financing
for sewer lateral improvements.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 74-0
Support and Opposition (6/2/11)
Support : Irvine Ranch Water District; North Bay Water
Association; Association of California Water Agencies;
California Association of Realtors; California Association
of Sanitation Agencies; California Fence Contractors'
Association; California Municipal Utilities Association;
California Special Districts Association; California State
Association of Counties; City of San Diego; Cucamonga
Valley Water District; Desert Water Agency; East Bay
Municipal Utility District; Eastern Municipal Water
District; El Dorado Irrigation District; Engineering
Contractor's Association; Inland Empire Utilities Agency;
Novato Sanitary District; Marin Builders Association;
Municipal Water District of Orange County; Regional Council
of Rural Counties; Sierra Club; Santa Margarita Water
District; Sonoma County; Sonoma County Water Agency; South
Coast Water District; Three Valleys Municipal Water
District.
Opposition : Unknown.
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