BILL ANALYSIS Ó AB 741 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 741 (Huffman) As Amended June 9, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |74-0 |(May 9, 2011) |SENATE: |37-0 |(June 27, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY : Authorizes a local agency that is authorized to acquire, construct, maintain and operate sanitary sewers and sewerage systems to use to, at a property owner's request, construct all necessary plumbing to connect his or her property to the adjoining public sewer system, the cost of which constitutes a lien on the property. The Senate amendments : 1)Increase the time period from 15 to 30 years on installments of payments for improvement costs. 2)Increase the interest rate from 6% to 12% for unpaid balance payments for improvement costs. EXISTING LAW : 1)Specifies that any owner who has his or her property included within an assessment district for the construction of a main trunkline or collector sewer lines, may request the governing board to construct all necessary plumbing to connect his or her property to the adjoining street public sewer system. 2)Requires the person employed by the governing board to do the work to have a lien upon the property, for work done and materials furnished at the request of the property owner. 3)Authorizes the governing board of an agency to pay all, or any part, of the cost or price of the connection to the person or persons who furnished labor, materials, or equipment and, to the extent that the governing board pays the cost or price of the connection, at which time the lien would be transferred to the governing board. AB 741 Page 2 4)Authorizes, alternatively to the procedures described above, the governing body of the public agency performing the work of connection to the public sewer to, by the power of ordinance approved by a two-thirds vote of the members of the legislative body, do the following: a) Fix the cost of improvement for connection to the sanitation or sewerage facilities; b) Fix the times at which such costs shall become due; c) Provide for the payment of the costs prior to the construction and connection or in installments over a period, not to exceed 15 years; d) Provide a rate of interest, not to exceed 6% per year, to be charged on the unpaid balance of the costs; and, e) Provide that the amount of the costs and the interest shall constitute a lien against the respective lots or parcels upon which the facilities are constructed. 5)Specifies that a governing body can alternatively, by ordinance approved by a two-thirds vote of the members of the legislative body, do the following: a) Fix fees or charges for the privilege of connecting to its sanitation or sewerage facilities and improvements constructed by the entity pursuant to specified provisions; b) Fix the time or times at which the fees or charges shall become due; c) Provide for the payment of the fees or charges prior to connection or in installments over a period of not to exceed 30 years; d) Provide the rate of interest, not to exceed 12% per year, to be charged on the unpaid balance of the fees or charges; and, e) Provide that the amount of the fees or charges and the interest shall constitute a lien against the respective lots or parcels of land to which the facilities are AB 741 Page 3 connected at the time and in a specified manner. AS PASSED BY THE ASSEMBLY , this bill: 1)Authorized a county, city and county, city, sanitary district, county sanitation district, county service area, sewer maintenance district, and other public corporations and districts that are authorized to acquire, construct, maintain and operate sanitary sewers and sewerage systems to, at a property owner's request, construct all necessary plumbing to connect his or her property to the adjoining public sewer system, the cost of which constitutes a lien on the property. 2)Specified that the process listed above in 1) may be used for either of the following purposes, whether or not an order or other action has been issued or taken for an abatement of contamination created by sewage disposal: a) Converting properties from onsite septic systems and connecting them to a sewer system. The conversion improvements and costs may include, but are not limited to, pipes, pumps and other equipment, septic system abandonment, and associated sewage treatment capacity; or, b) Replacing or repairing existing sewer laterals connecting pipes to a sewer system. The cost of the lateral replacement or repair shall constitute the cost of an improvement for connection to a sewer system. 3)Specified that the authority granted by this measure shall be in addition to, shall not be in derogation of, and shall 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 pursuant to any other law. 4)Stated that this section shall be deemed to provide a complete and supplemental method for exercising the powers authorized by this section, and shall be deemed supplemental to the powers conferred by other applicable laws. FISCAL EFFECT : None COMMENTS : According to the United States Environmental Protection Agency, septic systems that are properly planned, AB 741 Page 4 designed, sited, installed, operated and maintained can provide excellent wastewater treatment. However, systems that are sited in densities that exceed the treatment capacity of regional soils and systems that are poorly designed, installed, operated or maintained can cause problems. The most serious documented problems involve contamination of surface waters and groundwater with disease-causing pathogens and nitrates. Other problems include excessive nitrogen discharges to sensitive coastal waters and phosphorus pollution of inland surface waters, which increases algal growth and lowers dissolved oxygen levels. Contamination of important shellfish beds and swimming beaches by pathogens is also a concern in some coastal regions. According to the author, converting from a septic to sewer system protects public and environmental health by ensuring that wastewater is collected and conveyed to treatment and disposal facilities with minimal risk and increases water quality benefits. But the cost to convert a septic system to a sewer system can be expensive. There can be multiple major costs in converting from a septic system to sewer service, including: the public sewer infrastructure, side sewer construction, septic system abandonment, and connection fees. The co-sponsor, Irvine Ranch Water District (IRWD), states that the costs to customers of converting their septic systems to a community sewer system, or for replacing aging sewer laterals, are often prohibitive, costing $2,000 to $14,000 for septic conversions and $3,000 to $12,000 for laterals. If pumps or pump replacements are needed, this can be an additional $10,000. This bill builds on existing law by authorizing public wastewater agencies to offer voluntary private liens to private property owners to finance lateral replacements and conversions from septic to sewer systems. According to IRWD, this change in law would help private property owners finance the costs of converting from a septic system to a community sewer system and the replacement of sewer laterals. IRWD believes that by making these improvements feasible this bill would protect water quality, the environment and public health from contamination caused by leaking septic tanks, eroding pipes and other aging sewage infrastructure. Support arguments: Supporters argue that this bill provides property owners with options on financing the needed sewer and lateral conversions, which will encourage property owners to convert from septic systems to community sewer systems and to AB 741 Page 5 replace aging and damaged sewer laterals. Moreover, supporters believe that the bill protects water quality, the environment, and public health from contamination caused by these aging infrastructures. Opposition arguments: Opposition could argue that this bill does not provide any protections to the local agencies when entering into an agreement with a property owner to do these costly upgrades. The Legislature may wish to consider if it might be prudent to require a local agency establishing these liens to verify the credit worthiness of the property owner prior to entering into an agreement. Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958 FN: 0001294