BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 750| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 750 Author: Wolk (D), et al. Amended: 5/14/13 Vote: 21 SENATE JUDICIARY COMMITTEE : 5-1, 5/7/13 AYES: Evans, Corbett, Jackson, Leno, Monning NOES: Anderson NO VOTE RECORDED: Walters SUBJECT : Building standards: water meters: multiunit structures SOURCE : California Rural Legal Assistance Foundation Natural Resources Defense Council Western Center on Law and Poverty DIGEST : This bill requires 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 further prohibits landlords from charging tenants separately for water service unless a submetering system is installed, provides instruction to landlords on how to charge tenants for submetered water service, and specifies the information that must be disclosed to tenants. ANALYSIS : Existing law: CONTINUED SB 750 Page 2 1.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. 2.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. 3.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. This bill: 1. States 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. 2. Requires 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. 3. Prohibits tenants from being charged separately for water unless they reside in a building where submeters have been installed. This bill further requires 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 CONTINUED SB 750 Page 3 The submeter indicator may be easily accessed and read by the tenant and the landlord without entering the dwelling unit. 1. Exempts 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 greater than four stories in height where the plumbing configuration renders the installation of submeters infeasible, as specified. 1. Requires 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 CONTINUED SB 750 Page 4 specified; and The location of the submeter and how to read the submeter. 1. Specifies 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 further requires the landlord's billing cycle for water service to match 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. 1. Requires 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. 2. Prohibits a landlord from charging additional fees related to water service, except for late fees or testing fees, as provided. This bill further provides 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. CONTINUED SB 750 Page 5 3. Permits the assessment of late fees up to 5% for any water service bill not paid within 20 days, as specified, and authorizes a landlord to deduct unpaid fees from a security deposit. However, this bill prohibits a landlord from shutting off water service to a unit for any reason, including nonpayment of a water bill. 4. Requires 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. 1. Requires a landlord to make certain repairs on the water system in a dwelling within seven days of a tenant's request. This bill further allows a tenant to request that a landlord have a submeter tested for accuracy, as specified. The landlord is then required to pay for the testing if the submeter is found to be inaccurate, or if the test indicates that the usage has increased more than 25% over two of the past three billing periods, as specified. 2. Permits, 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 also provides that any rights or obligations established under its provisions may not be waived. 3. Authorizes a city, county, a city and county, or district to enforce the above provisions. 4. Defines a number of terms, including submeter, water service, and water purveyor. Background Traditionally, renters were not responsible for utility costs. They were responsible for paying rent, and could use an CONTINUED SB 750 Page 6 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 foreseeable future by reducing water waste through cost-effective water saving technologies, revised economic policies, appropriate state and local regulations, and public education." Prior Legislation AB 19 (Fong, 2011), was substantially similar to this bill. This bill died in the Assembly Housing and Community Development Committee. CONTINUED SB 750 Page 7 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, Chapter 884, Statutes of 2004) required urban water suppliers to install water meters by 2025 on all service connections constructed before 1992. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/13/13) California Rural Legal Assistance Foundation (co-source) Natural Resources Defense Council (co-source) Western Center on Law and Poverty (co-source) California Advocacy Committee California League of Conservation Voters California Water Association Clean Water Action East Bay Municipal Utility District Environmental Defense Fund Environmental Health Coalition Housing Long Beach Legal Aid Foundation of Los Angeles Long Beach Water Department Planning and Conservation League Sierra Club California Sonoma County Sonoma County Water Agency U.S. Green Building Council CONTINUED SB 750 Page 8 OPPOSITION : (Verified 5/13/13) Apartment Association of Greater Los Angeles California Apartment Association California Association of Realtors California Building Industry Association California Business Properties Association San Diego County Apartment Association Santa Barbara Rental Property Association Utility Conservation Coalition Utility Management and Conservation Association ARGUMENTS IN SUPPORT : 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." 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." ARGUMENTS IN OPPOSITION : 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: 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 CONTINUED SB 750 Page 9 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. The opposition has expressed concerns about other costs associated with submeters. For example, the California Building Industry Association 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." (AL:nl):ej 5/14/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED