BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  August 19, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          SB 7  
          (Wolk) - As Amended July 16, 2015


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          |Policy       |Housing and Community          |Vote:|7 - 0        |
          |Committee:   |Development                    |     |             |
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          |             |Water, Parks and Wildlife      |     |10 - 4       |
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          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  








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          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  








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            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  








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            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.









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             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  








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            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