BILL ANALYSIS Ó
SB 7
Page 1
SENATE THIRD READING
SB
7 (Wolk)
As Amended August 31, 2015
Majority vote
SENATE VOTE: 28-7
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Housing |7-0 |Chau, Steinorth, | |
| | |Burke, Chiu, Beth | |
| | |Gaines, Lopez, Mullin | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Water |10-4 |Levine, Dababneh, |Dahle, Beth Gaines, |
| | |Dodd, Cristina |Harper, Mathis |
| | |Garcia, Gomez, Lopez, | |
| | |Medina, Rendon, | |
| | |Salas, Williams | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-4 |Gomez, Bloom, Bonta, |Bigelow, Gallagher, |
| | |Calderon, Nazarian, |Jones, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
SB 7
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| | |Wood | |
| | | | |
| | | | |
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SUMMARY: Requires, as of January 1, 2017, that individual water
meters, also called 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 water they use. Specifies rights and
obligations between landlords and tenants. Specifically, this
bill:
1)Creates a new article in the Water Code regarding submetering
(submetering article) that requires each water purveyor that
sells, leases, rents, furnishes, or delivers water service to
a newly constructed multiunit residential structure or newly
constructed mixed-use residential and commercial structure for
which a water connection is submitted after January 1, 2017,
to ensure each individual unit be metered or submetered as a
pre-condition to new water service. Prohibits the water
purveyor from imposing an additional capacity or connection
fee or charge for a submeter that is installed by an owner or
his or her agent.
2)Exempts long-term health care facilities, low-income housing,
residential care facilities, student dormitories, and
time-share properties from the requirement to submeter.
3)Defines low-income housing as a building financed with tax
credits, tax-exempt mortgage bonds or other federal, state, or
local funds, as specified, and where 90% or more of the units
are occupied by lower income households, which is defined as
persons and families whose income does not exceed the
qualifying limits for housing under Section 8 of the United
States Housing Act of 1937 or, under specified circumstances,
an equivalent.
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4)Allows the Department of Housing and Community Development
(HCD) to develop requirements for the installation of water
submeters in multiunit residential structures, including
specifying when such installation is infeasible and thus
exempt, such as potentially with high-rise multifamily
buildings and to propose those requirements for adoption by
the California Building Standards Commission (CBSC) in the
next regularly-scheduled update of the California Building
Standards Code that occurs on or after January 1, 2016.
5)Requires HCD to exempt long-term health care facilities,
low-income housing, residential care facilities, student
dormitories, and time-share properties in any building
standards it develops for submetering. Defines low-income
housing for the purposes of the exemption section.
6)Renders the submetering article inoperative (and thus
superseded) on the date that the CBSC includes submetering
requirements in the California Building Standards Code that
conform to the submetering article.
7)Adds a new Chapter to the Civil Code regarding "Water Service"
with findings that the purpose of this Chapter is to encourage
water conservation in multifamily residential buildings while
ensuring that practices for water service billing are just,
reasonable, and include appropriate safeguards for both
landlords and tenants.
8)Defines "billing agent," "landlord," "property," "purveyor,"
"rental agreement," "renting," "submeter," "water service,"
and "water purveyor," for the purpose of the statute.
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9)Specifies that properties that use submeters to separately
bill tenants for water service must ensure that meters and
submeters:
a) Conform to state rules and regulations governing devices
that weigh and measure;
b) Are installed and operated in compliance with
specifications for measuring devices;
c) Only measure the exclusive water use of that dwelling;
and
d) Are accessible to tenants and can be read by the
landlord without entering the dwelling.
10)Requires all plumbing fixtures within each dwelling to
conform to all laws regarding water conservation.
11)Specifies water purveyors are not responsible for ensuring
compliance with installation, certification, maintenance, and
testing of water submeters and associated onsite plumbing.
12)Requires the installation of submeters to be provided by
contractors licensed by the California Contractors State
License Board using workers who have graduated from a
state-approved apprenticeship program.
13)Requires a landlord that intends to charge a tenant
separately for water service to provide specified disclosures
in writing, in at least 10-point type, prior to executing a
rental agreement that include, but are not limited to:
information regarding calculation of the tenant's bill; due
dates, including any past-due fees that may be charged; and,
the tenant's rights regarding meter testing, leak repair, and
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submeter malfunctions, among other provisions.
14)Provides that the amount of the water bill shall be
calculated by multiplying the water volume as determined by
the submeter for the billing period by the rate or rates for
the volumetric usage that are established by the water
purveyor for residential use (volumetric use charge).
15)Specifies that the monthly bill for water service may only
include four charges:
a) A volumetric use charge based on the tenant's
proportional water use.
b) The tenant's portion of the fixed charges from the water
purveyor divided equally, or by proportion of volumetric
use charge, among all property units.
c) A billing, administrative, or other fee for the
landlord's and billing agent's costs, that is no more than
$4.75 or 25% of the amount billed, whichever is less.
Beginning January 1, 2018, allows a billing fee percentage
increase but limits it to no more than the Consumer Price
Index California fiscal year average for the previous year.
d) A late charge, as specified.
16)Does not prevent the landlord or the landlord's billing agent
from using one bill to cover multiple lawful charges to the
same tenant.
17)Requires meters to be read within three days of the same
point in each billing cycle and payments to be due at the same
point in each billing cycle. Requires that the submeter must
be read upon the tenant taking possession, within five days of
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ending the tenancy, or as specified.
18)Allows a tenant to agree to be billed electronically but
prohibits a tenant from being compelled to receive electronic
bills. Requires the tenant be provided contact information for
questions regarding the bill including a local or toll-free
phone number and a statement on the bill that the landlord or
billing agent is not the water purveyor and the name of the
local water purveyor providing water service to the master
meter.
19)Does not allow a landlord to pass through water charges or
penalties that are imposed by a water purveyor on a landlord
unless they are related to tenant's documented conduct.
20)Requires a landlord to make available, within seven days from
a tenant's written request:
a) Information relating to the submeters inspection,
testing, and verification unless that information is
unavailable, in which case the landlord shall disclose it
is unavailable.
b) The data used to calculate this bill, as specified.
c) The location of the submeter.
21)Provides that if a water system in a dwelling unit does not
function properly, including plumbing leaks that allow
unnecessary water consumption or a malfunction submeter, the
landlord should investigate and, if warranted, repair the
condition. Prohibits a tenant from removing water fixtures or
water conservation devices installed by the landlord.
22)Requires a landlord who is notified of leaks or other
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conditions causing water consumption or a submeter reading
indicating constant or abnormal water usage to repair the
condition within 14 days or be:
a) Restricted to charging the tenant, for the period after
the 14 days, $15 for the month's water use, or actual
usage, whichever is less; or,
b) Allowed, at the landlord's option, to charge a maximum
of $0.50 per day for those days between the two meter
readings, or actual usage, whichever is less, if there are
meter readings for both before and after the repair; and,
c) Prohibited from charging for volumetric water usage if
the condition is unrectified for 6 months after the
investigation.
23)Allows the landlord, consistent with current laws governing
landlord entry, to access the tenant's unit for purposes of
installing, reading, repairing, testing and maintaining a
submeter or repairing or testing a water fixture the tenant
reports is in need of repair.
24)Provides that if a monthly submeter reading is unavailable,
the landlord shall advise the tenant and bill at a rate equal
to 75% of the tenant's average monthly use based on the three
prior months. If billing for the three prior months is
unavailable, the use charge for days that data is unavailable
shall be $0.50. If readings remain unavailable for six
months, the volumetric use charge shall be zero.
25)Allows a landlord to impose a late fee of up to $7 for bills
overdue by 25 days and a late fee of up to $10 in each
subsequent bill if an amount remains unpaid. Requires partial
payments to be credited against the bill outstanding the
longest.
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26)Allows a landlord, under specified circumstances, to deduct
from the security deposit late bills or bills of tenants who
have vacated. Allows a bill that is 30 days overdue to
constitute a material breach of the lease that gives the
landlord the right to terminate the tenancy.
27)Specifies that water service charges do not constitute rent
and that a landlord is prohibited from shutting off water to a
dwelling unit except as needed for repairs, replacements of
equipment, or maintenance.
28)Does not preclude or preempt ordinances or regulations
adopted prior to January 1, 2013, that govern the approval,
installation, maintenance, reading, billing, or testing of
submeters and onsite plumbing.
29)Prohibits the waiver of any of the provisions established
under this chapter and makes any purported waiver void.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
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 Personnel Year (PY) of staff to develop the proposed
building standards (Building Standards Administration Special
Revolving Fund).
2)Minor and absorbable costs for the CBSC to adopt the proposed
building standard in the next or subsequent triennial code
adoption cycle.
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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:
Background: Existing law, the California Building Standards
Law, authorizes the CBSC 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 CBSC 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
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
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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 multifamily residential units or mixed
commercial and multifamily units, 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.
Purpose of this bill: According to the author, "California's
water supply is under intense pressure from climate change,
increasing 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."
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
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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% by 2020.
This bill will give residents the tool they need to make
changes."
Arguments in opposition: Amendments adopted on July 16,2015,
restricting the installation 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. Opponents
question the need for this amendment, and contend that "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 are no known concerns or
workmanship performance issues that need to addressed by this
legislation." Opponents also argue that the requirement to use
workers who have graduated from a state-approved apprenticeship
program may be appropriate when public funding is involved, but
should not apply to private construction on private property.
Related legislation:
SB 750 (Wolk) of the 2013-14 Regular Session: This bill would
have mandated that water purveyors adopt policies requiring that
newly constructed multiunit residential structures or mixed use
residential and commercial structures that apply for water
connections after January 1, 2015, have, as a condition of new
water service, submeters that measure the water supplied to each
individual dwelling unit. Included a cap on the administrative
fee that landlords can charge a tenant for billing for water.
This bill passed out of the Assembly Housing and Community
Development Committee on a 5-2 vote. Failed passage in the
Assembly Water, Parks, and Wildlife Committee.
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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.
AB 19 (Fong) of the 2011-12 Regular Session: This bill would
have mandated that water purveyors adopt policies requiring that
multiunit residential structures or mixed use residential and
commercial structures that apply for water connections after
January 1, 2014, have, as a condition of new water service,
submeters that measure the water supplied to each individual
dwelling unit. Passed out of the Assembly Water, Parks, and
Wildlife Committee on an 8-0 vote. This bill failed passage in
the Assembly Housing and Community Development Committee.
AB 1975 (Fong) of the 2009-10 Regular Session: This bill would
have required HCD to adopt building standards requiring
installation of individual water meters and submeters in newly
constructed multiunit residential buildings. This bill died on
the suspense file in the Senate Appropriations Committee.
AB 1173 (Keene) of the 2007-08 Regular Session: This bill would
have required submeters in multiunit residential structures
built after January 1, 2010. This bill died on the suspense
file in the Assembly Appropriations Committee.
Analysis Prepared by:
Rebecca Rabovsky / H. & C.D. / (916) 319-2085
FN:
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