BILL ANALYSIS Ó SB 7 Page 1 Date of Hearing: August 19, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair SB 7 (Wolk) - As Amended July 16, 2015 ----------------------------------------------------------------- |Policy |Housing and Community |Vote:|7 - 0 | |Committee: |Development | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Water, Parks and Wildlife | |10 - 4 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires, as of January 1, 2017, that individual water meters (submeters) be installed on all new multifamily residential units or mixed commercial and multifamily units, and requires that landlords bill residents for the increment of SB 7 Page 2 water they use. The bill also specifies rights and obligations between landlords and tenants. Recent amendments require that the installation and maintenance of submeters be provided by licensed plumbing contractors using workers who have graduated from a state approved apprenticeship program. FISCAL EFFECT: 1)HCD administrative costs of $244,000 over two years ($127,000 in the first year, $114,000 in the second year) for 1 limited term PY of staff to develop the proposed building standards (Building Standards Administration Special Revolving Fund). 2)Minor and absorbable costs for the BSC to adopt the proposed building standard in the next or subsequent triennial code adoption cycle. 3)Minimal fiscal impact to the Department of Food and Agriculture. This bill would increase the amount of water submeters installed in multiunit structures. Each water submeter is charged an annual device administrative fee in the amount of $0.10 per device. These funds are deposited into the Department of Food and Agriculture Fund. The Department estimates the increase in revenue generated by the additional water submeters will be less than $5,000 annually. COMMENTS: 1)Purpose. The author states that "California's water supply is under intense pressure from climate change, increasing SB 7 Page 3 population and development. The financial demands from communities around the state for additional water and wastewater infrastructure currently exceed the available state and federal budgetary resources. Thus, it is essential that all California communities use existing water supplies as efficiently as possible." The author adds that "water metering and volumetric pricing are paramount to giving Californians an accurate price signal about their water use." The author states that "California's population is 38 million people and growing. Currently, 46% live in multi-family housing. Of the State's 15.6 million apartment residents, fewer than 20% (3.1 million) are billed for their water use. In other words, for 80% of California's apartment renters, or 12.5 million Californians, there is no correlation between water usage and cost." 2)Background. Existing law, the California Building Standards Law, authorizes the BSC to approve and adopt building standards through a triennial rulemaking process to revise and update the California Building Standards Code. There are approximately twenty state agencies that develop building standards for submittal to the BSC for review, approval, and adoption. HCD is responsible for proposing building standards for residential buildings including, hotels, motels, lodging houses, apartment houses, dwellings, buildings and structures. Building standards take effect 180 days after they are published, unless a different date is specified. The most recent update to the Building Standards Code has been in effect since January 1, 2014. The 2015 triennial code adoption cycle for the development of the 2016 California Building Standards Code is currently underway. The subsequent triennial cycle will commence in 2018. Existing law requires all new water service connections to be metered, and requires water purveyors to charge water users SB 7 Page 4 based on the actual volume of deliveries as measured by those meters. In addition, all existing unmetered water connections must be retrofitted with a meter by 2025. Generally, individual units in multiunit residential buildings are not metered or submetered, and residents typically pay for water and sewage based on the average water use of all units, rather than actual usage attributable to individual units. This bill would require installation of water submeters in all newly constructed multi-residential dwellings, for which an application for water connect is received, after January 1, 2017. This bill is prospective and does not require an owner of an existing multifamily dwelling to install submeters, retrofit existing submeters, or use existing submeters that are currently unused. 3)Related legislation: On May 18, 2015, the California Department of Finance posted language very similar to SB 750 as trailer bill proposal number 826 to the Natural Resources and Capital Outlay area of the Governor's 2015-16 Budget. The Governor's office grouped the submetering requirement with other proposals addressing drought but ultimately left the language out of the budget. 4)Prior Legislation. a) SB 750 (Wolk) of 2013 was substantially similar to this bill. The bill failed passage in the Assembly Water, Parks, and Wildlife Committee. b) AB 19 (Fong) of 2011 was also substantially similar to SB 750. The bill failed passage in the Assembly Housing and Community Development Committee. SB 7 Page 5 c) AB 1975 (Fong) of 2010 would have required HCD to adopt building standards requiring the installation of individual water meters and submeters in newly constructed multiunit residential buildings. The bill was held on Suspense in the Senate Appropriations Committee. d) AB 1173 (Keene) of 2007 would have required submeters in multiunit residential structures built after January 1, 2010. This bill was held on this Committee's Suspense File. 1) Arguments in Support. Supporters, primarily environmental groups and advocates for low income residents, state that this bill will "help apartment dwellers track their water use, and because people will pay their water bills directly (rather than through their rent as is the common practice), they will have an incentive to reduce wasteful practices. People living in multiunit housing will be a critical part of the pictures as California suppliers strive to reduce water use by 20 percent by 2020. This bill will give residents the tool they need to make changes." 2)Arguments in Opposition. July 16 amendments restricting the installation and maintenance of submeters to workers who have graduated from a state approved apprenticeship program elicited new opposition to the bill from members of the bill's working group who were previously in support or neutral. In particular, the apartment and rental property associations, realtors, and utility management groups argue, "The installation of submeters is a highly specialized activity, requiring service agents to be trained to follow very specific regulations issued by the California Department of Food and Agriculture's Division of Measurement Standards. This system has been in place for years and there is no known concerns or workmanship performance issues that need to addressed by this SB 7 Page 6 legislation." They are also concerned by the precedent being set regarding the State directing who can and can't perform certain work, despite their qualifications, especially private construction on private property. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081