BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
SB 750 (Wolk)
As Amended April 29, 2013
Hearing Date: May 7, 2013
Fiscal: No
Urgency: No
NR
SUBJECT
Building standards: water meters: multiunit structures
DESCRIPTION
This bill would state the intent of the Legislature to encourage
the conservation of water in multifamily residential buildings.
To that end, this bill would require newly constructed multiunit
residential structures, and newly constructed mixed-use
residential and commercial structures, to require the
installation of water submeters to measure the water supplied to
each individual dwelling unit. This bill would require an owner
of these structures to ensure that the installation and
operation of water submeters comply with laws and regulations.
This bill would also prohibit a landlord, whose property has
submeters installed, from charging tenants separately for water
service unless a water and submetering system is installed,
operated, and maintained as specified, and would require a
landlord to make certain disclosures to a tenant prior to the
execution of a rental agreement. This bill would specify that a
landlord may only bill a tenant for water usage, as specified,
and a portion of any recurring fixed charge billed to the
property by the water purveyor, as based on the proportion of
the tenant's water use.
This bill would prohibit a landlord from charging additional
fees related to water service, except for late fees or testing
fees, as provided, and would require a landlord to maintain and
make available specified installation, maintenance, and testing
records to a tenant upon request. This bill would further
require a landlord to make certain repairs on the water system
(more)
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in a dwelling within seven days of a tenant's request. The bill
would also permit specified late fees for late or non-payment of
a water bill, and authorize a landlord to deduct unpaid fees
from a security deposit, but would not permit a landlord to shut
off water service to a unit for any reason. In addition to
actual damages, this bill would permit a tenant to recover from
the landlord certain damages, costs, and fees for a violation of
these provisions. The bill would authorize a city, county, city
and county, or district to enforce these provisions. BACKGROUND
Traditionally, renters were not responsible for utility costs.
They were responsible for paying rent, and could use an
unlimited amount of utilities. The movement towards individual
billing began in the late 1970s and early 1980s when the United
States was faced with a critical energy crisis that led
government officials to explore alternative energy conservation
measures. This effort led to a variety of significant changes in
our culture, including more fuel-efficient automobiles, and the
individual metering of gas and electricity for multifamily
housing residents.
Prior to the energy crisis, the majority of communities were
served by only one gas meter and one electric meter. Thus,
residents of these properties had no financial motivation to
conserve. Confronted with limited energy resources, the majority
of states enacted measures that mandated individual metering of
gas and electricity for newly constructed communities.
Similarly, in the past decade, the need to conserve water has
moved to the forefront of discussions about conservation across
the country. Property owners who bill their residents for water
usage typically use one of two methods: submetering or
allocation. A submetered property is one that consists of a
separate meter that measures water usage for that unit.
Residents are then billed monthly for their water. This billing
is often performed by a third party billing company on behalf of
the property owner. Alternatively, allocation systems may be
used when a submeter is not installed. In these situations,
residents are billed for water based on another factor, such as
the square footage of their apartment home, or the number of
occupants.
Many studies have shown that California's particular water needs
could be met by increased conservation and efficiency efforts.
The Pacific Institute's Report, Waste Not, Want Not : The
Potential for Urban Water Conservation in California, concluded
that "California's urban water needs can be met into the
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foreseeable future by reducing water waste through
cost-effective water saving technologies, revised economic
policies, appropriate state and local regulations, and public
education." To that end, this bill would require new multiunit
construction to measure water consumption by individual dwelling
units, through meters installed and operated by the water
utility, or by submeters that would be read and operated by the
landlord. This bill would also include several tenant
protections, including requiring a landlord to charge tenants
based on their actual usage, and requiring landlords to disclose
information regarding the management and operation of the
submeters.
CHANGES TO EXISTING LAW
Existing law requires urban water suppliers, that do not get
water from the federal Central Valley Project, to install water
meters on all municipal and industrial service connections and
to charge each customer based on actual volume of water
delivered. (Wat. Code Sec. 526.)
Existing law provides that each water corporation that is not
already subject to water metering requirements, under the
existing Water Measurement Law must currently install a water
meter on each new service connection and must retrofit each
unmetered service connection by January 1, 2025. (Wat. Code Sec.
527.)
Existing law authorizes the Building Standards Commission to
approve and adopt building standards, and provides that every
three years a building standards rulemaking is undertaken to
revise and update the California Building Standards Code (Title
24 of the Cal. Code of Regs.)
This bill would state the intent of the Legislature to encourage
the conservation of water in multifamily residential units and
to ensure that the practice of submetering for water service
provide appropriate safeguards for both tenants and landlords.
This bill would require newly constructed multiunit residential
structures, and newly constructed mixed-use residential and
commercial structures, to require the installation a submeter,
as defined, to measure water supplied to each individual
dwelling unit.
This bill would prohibit tenants from being charged separately
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for water unless they reside in a building where submeters have
been installed. This bill would further require the landlord to
ensure that the water submeters comply with laws and regulations
governing installation, operation, and maintenance including the
following:
the installation was performed by a licensed service provider;
the submeter for each dwelling unit measure only water
supplied for the exclusive use of that unit; and
the submeter indicator may be easily accessed and read by the
tenant and the landlord without entering the dwelling unit.
This bill would exempt the following types of structures from
the requirements of this bill:
low income housing, as defined;
student dormitories;
long-term healthcare facilities, as defined;
time-share properties; as defined;
residential care facilities, as defined; and
structures that are greater than four stories in height where
the plumbing configuration renders the installation of
submeters infeasible, as specified.
This bill would require that prior to executing a rental
agreement, a landlord who intends to charge a tenant separately
for water service shall disclose specified information to a
tenant, including the following:
that the tenant will be billed for water separately from the
rent;
that the tenant will also be billed for a portion of any
recurring fixed charge billed to the property by the water
purveyor, as specified;
the due dates and payment procedures for bills of water
service;
that no other administrative, connection, disconnection,
billing, or other periodic fee or charge, except for a late
fee or submeter testing fee, may be assessed;
the terms of a late fee, if the landlord reserves the right to
charge one;
the average bill for water service per unit, as specified; and
the location of the submeter and how to read the submeter.
This bill would specify that a landlord may only charge a tenant
for a portion of the water service bill based on the proportion
of the tenant's volumetric water use. This bill would further
require the landlord's billing cycle for water service to match
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that of the water purveyor, as specified, and that each bill
include specified information including:
the submeter readings for the beginning and end of the billing
cycle, the dates read, and indicated consumption;
the unit of measure and rates charged;
current charges for volumetric usage;
the amount of any recurring fixed charge for water service;
the total water consumption for the property;
the percentage of the total water consumption that was
consumed by the tenant;
the total amount and date due, plus any late charges; and
contact information of the person who is authorized to make
adjustments to the bill.
This bill would require a submeter to be read within three days
of the beginning or end of a tenancy, to determine the amount of
the first or last bill for water service.
This bill would prohibit a landlord from charging additional
fees related to water service, except for late fees or testing
fees, as provided. This bill would further provide that
landlords are not prohibited from recovering costs by
incorporating them into the rent, as long as rent is a fixed
amount per rental period, as specified.
This bill would permit the assessment of late fees up to five
percent for any water service bill not paid within 20 days, as
specified, and authorize a landlord to deduct unpaid fees from a
security deposit. However, this bill would prohibit a landlord
from shutting off water service to a unit for any reason,
including nonpayment of a water bill.
The bill would require a landlord to maintain and make the
following available, in writing, upon the tenant's request
within seven days:
installation and maintenance records of the tenant's dwelling
unit, as specified;
the most recent test results; and
the method and sources used to determine the rate at which the
tenant is charged for water.
The bill would require a landlord to make certain repairs on the
water system in a dwelling within seven days of a tenant's
request. This bill would further allow a tenant to request that
a landlord have a submeter tested for accuracy, as specified.
The landlord would be required to pay for the testing if the
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submeter is found to be inaccurate, or if the test indicates
that the usage has increased more than 25 percent over two of
the past three billing periods, as specified.
This bill would permit, in addition to actual damages, a tenant
to recover from the landlord specified damages, costs, and fees
for a violation of the above provisions. This bill would also
provide that any rights or obligations established under its
provisions may not be waived.
This bill would authorize a city, county, a city and county, or
district to enforce the above provisions.
This bill would define a number of terms, including submeter,
water service, and water purveyor.
COMMENT
1.Stated need for the bill
According to the author:
California's water supply is under intense pressure.
Development patterns, population growth, and agriculture all
add to the challenge. To make environmentally and economically
responsible choices, Californians must have accurate
information about their water usage and its costs. Water
metering and volumetric pricing are essential components of
achieving that goal. As this strategy is implemented, it is
important that renters are protected and a comprehensive and
fair framework is put in place. Tenants must have the
opportunity to address concerns regarding the operation of
water meters and to redress unfair water charges.
2.Provisions of bill intended to apply only to submetered
properties
This bill would require that any newly constructed multiunit
residential structure that submits an application for a water
connection must install submeters to measure the water supplied
to each individual unit. This bill would further prohibit
landlords from charging tenants separately for water service
unless a submetering system is installed, provide instruction to
landlords on how to charge tenants for submetered water service,
and specify the information that must be disclosed to tenants.
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In support of this bill the Environmental Defense Fund writes,
"Multi-unit submetering in new construction is an essential step
towards a secure and reliable water future in California.
Submetering ensures that consumers receive an appropriate signal
regarding both the volume and cost of their water use. It
incentivizes residents to undertake responsible water use, and
can also be useful in identifying locations of unnecessary
leakage." Staff notes that there is disagreement among
stakeholders regarding how this bill would affect existing
properties. As noted by in the Utility Conservation Coalition
in their letter of opposition, "language in SB 750 would in
effect stop existing rental property owners from billing for
water." This does not appear to be the intention of the author,
however, as written, this bill may create confusion as to
whether landlords without submeters are prohibited from charging
tenants separately for water.
Accordingly, the following amendment would clarify that only
landlords operating buildings with submeters who wish to charge
tenants separately for water must follow the guidelines outlined
in the bill.
Suggested amendment:
On page 4, strike lines 3 through 5, and insert the following:
A landlord shall not charge tenants separately for water
service in a property with submeters unless the submetering
system is installed, operated, and maintained as follows:
3.Tenant protections and private right of action
This bill would provide a number of tenant protections,
including mandatory disclosures related to water service and
submeters, and a series of prohibitions on a landlord's actions,
including charging tenants additional fees related to water
service, and a prohibition on a landlord shutting off a tenant's
water. This bill would also mandate how a multiunit residence's
submetering program must be managed, and require specified
information on a tenant's water service bill. Significantly,
this bill would provide that for any violation of the provisions
under this bill, in addition to actual damages, a tenant may
recover from the landlord three times the amount of actual
damages, a civil penalty equal to one month's rent, reasonable
attorney's fees, and court costs. The bill would further provide
that a landlord will not be liable for a civil penalty if the
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landlord proves that the violation was a good faith,
unintentional mistake.
The Western Center on Law and Poverty, in support of this bill,
stresses the necessity of tenant protections as water
conservation plans are executed with respect to multiunit
residences. They note that, "as this strategy is implemented,
it is important that tenants are protected and a comprehensive
and fair framework is put in place. Tenants must have the
opportunity to address concerns regarding the operation of water
meters and to redress unfair water charges."
To that end, under this bill, tenant plaintiffs would be
permitted to bring an action if a landlord failed to do a number
of things, including disclose particular information related to
a submeter, test a submeter for accuracy, or repair leaks.
Significantly, a tenant would have a cause of action if a
landlord terminated water service to a unit for failure to pay a
water bill. Actual damages, which a plaintiff would be entitled
to in any action where the court finds that the landlord
violated a provision of this bill, would be calculated by actual
expenses incurred by a plaintiff. Thus, because of the range of
potential violations, actual damages could range from mere
dollars to substantial amounts depending on the circumstances of
each case.
A plaintiff would be entitled to damages beyond actual damages
if a landlord was unable to prove that a violation was a good
faith, unintentional mistake. In that case, the language in
this bill is permissive, and would provide that a tenant may
recover treble damages, a civil penalty, and/or attorney fees
and court costs, thus giving the court the discretion to create
a fair award depending on the actual circumstances of the
action.
4.Cost recovery
This bill would prohibit a landlord from charging or recovering
from tenants any additional fees including: servicing,
administrative, establishment, maintenance, meter reading, meter
testing, billing, disconnection/reconnection, or fees for any
other water-related purpose. The bill would allow landlords to
recover these costs by incorporating them into rent, as long as
the rent is a fixed amount per rental period, and the charges
are not listed separately.
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The opposition raises concerns to these provisions, arguing that
landlords will not be able to adequately cover the costs
associated with submetering programs. The California Apartment
Association writes in opposition:
With the mandate for the installation of water meters or
submeters, SB 750 asks property owners to provide a service
currently conducted by water utilities. SB 750 would require
property owners to bear all the costs of installing,
maintaining, and repairing submeters. In addition, it
requires owners to read submeters and individually bill each
tenant.
Most rental property owners don't have the expertise to
conduct such a program and would simply hire third party
vendors. Vendors who perform these services would charge and
bill tenants between four and five dollars per occupied unit
for the costs of reading and billing. ? Recovering ACTUAL
costs associated with a submetering program is a customary
practice in other states and, for example, in the City of San
Diego. SB 750 expressly prohibits any administrative or
servicing fee, thereby preempting local ordinances like San
Diego's.
In response, the author writes that "SB 750 does not prohibit
cost recovery. The property owners can recover the cost of
billing tenants for water service through the charge for rent.
Currently property owners recover a variety of costs through
rent." Further, the City of San Diego appears to be the only
local California ordinance which requires submeters, and has not
taken a position with regard to this bill.
Staff further notes that recovering administrative and servicing
costs through rent is feasible because the provisions of this
bill are only applicable to new construction. Thus, rental
agreements and leases for these individual dwelling units have
yet to be entered into, and lease amounts have not yet been
determined. In addition, the author has been consistently
working with stakeholders to address the concern of cost
recovery, and hopes to reach an agreement whereas interested
groups can agree on a fair and reasonable fee which may be
charged to tenants to cover administrative costs.
5.Opposition's remaining concerns
The opposition has expressed concerns about other costs
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associated with submeters. For example, the California Building
Industry Association (BIA) argues that, "over the years we have
witnessed the provision of unjustified fees by local governments
when property owners and developers attempt to voluntarily
install submeters. There have been instances where local
governments have charged developers separate hook-up or
connection fees for EACH individual submeter, in addition to a
fee for the mater meter. This practice must be curtailed if we
plan to mandate meters and submeters." In response, the author
writes:
We have asked the BIA to provide examples where a local
government has levied an unjustified fee on property owners
and developers for voluntarily installing submeters. We have
asked for all the information - where have local governments
or water agencies charged unjustified fees on property owners
and developers who voluntarily install submeters? What were
the charges? Who assessed the charges? How was the issue
resolved between the developer and the local government?
We have not received any information from the opposition to
assess whether this actually happened, if it was a one-time
incident, or if this is a widespread problem occurring in
California. If this is an actual widespread problem, we are
willing to address it.
The opposition also argues that SB 750 is overly prescriptive
regarding submetering operations, and fails to realistically
account for the particulars of managing such a program, and
prohibits some basic management practices. The opposition also
argues that several housing developers have complained of
submeter supply shortages, making compliance with this bill
impossible. In response, the author writes "we are willing to
address this issue and will engage the appropriate state or
local agencies if this is an actual problem. Opponents have not
provided us with any examples where a developer was unable to
find an adequate supply of submeters."
Support : California Advocacy Committee; California League of
Conservation Voters; California Water Association; East Bay
Municipal Utility District; Clean Water Action; Environmental
Defense Fund; Environmental Health Coalition; Legal Aid
Foundation of Los Angeles; Long Beach Water Department; Natural
Resources Defense Council; Planning and Conservation League;
Sierra Club California; Sonoma County Water Agency
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Opposition : Apartment Association of Greater Los Angeles;
California Apartment Association; California Association of
Realtors; California Building Industry Association; California
Business Properties Association; Utility Conservation Coalition;
Utility management and Conservation Association; San Diego
County Apartment Association; Santa Barbara Rental Property
Association
HISTORY
Source : California Rural Legal Assistance Foundation; Natural
Resources Defense Council; The Western Center on Law and Poverty
Related Pending Legislation : None Known
Prior Legislation :
AB 19 (Fong, 2011) was substantially similar to this bill. This
bill died in the Assembly Housing and Community Development
Committee.
AB 1975 (Fong, 2010) would have required the Department of
Housing and Community Development to adopt building standards
requiring the installation of individual water meters or
submeters in newly constructed multi-unit residential buildings.
This bill died in the Senate Appropriations Committee.
AB 1173 (Keene, 2007) would have required submeters in every
multiunit residential structure built after January 1, 2010. It
also would have authorized landlords to charge tenants based on
the actual volume of water delivered to a tenant's unit or
authorized landlords operating buildings without water submeters
to charge tenants separately for the costs of water by a
prescribed allocation formula. This bill died in the Senate
Appropriations Committee.
AB 2572 (Kehoe, Ch. 884, Stats. 2004) required urban water
suppliers to install water meters by 2025 on all service
connections constructed before 1992.
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