BILL ANALYSIS Ó
SB 7
Page 1
SENATE THIRD READING
SB
7 (Wolk)
As Amended August 19, 2016
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 Garcia, |Harper, Mathis |
| | |Gomez, Lopez, Medina, | |
| | |Rendon, Salas, | |
| | |Williams | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Appropriations |12-4 |Gomez, Bloom, Bonta, |Bigelow, Gallagher, |
| | |Calderon, Nazarian, |Jones, Wagner |
| | |Eggman, | |
| | | | |
| | | | |
SB 7
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| | |Eduardo Garcia, | |
| | |Holden, Quirk, Rendon, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Requires, as of January 1, 2018, 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, housing at a place of education,
and time-share properties from the requirement to submeter.
3)Defines low-income housing as a residential 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
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United States Housing Act of 1937 or, under specified
circumstances, an equivalent.
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, housing at a
place of education, 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 the following terms for the purpose of the statute:
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a) "Billing agent" means a person or entity who contracts
to provide submetering services to a landlord, including
billing.
b) "Landlord" means an owner of residential rental
property. "Landlord" does not include a tenant who rents
all or a portion of a dwelling unit to subtenants.
"Landlord" does not include a common interest development,
as defined.
c) "Property" means real property containing two or more
dwelling units that is served by a single master meter.
d) "Ratio utility billing system" means the allocation of
water and sewer costs to tenants based on the square
footage, occupancy, or other physical factors of a dwelling
unit.
e) "Rental agreement" includes a fixed-term lease.
f) "Renting" includes leasing, whether on a periodic or
fixed-term basis.
g) "Submeter" means a device that measures water
consumption of an individual rental unit within a multiunit
residential structure or mixed-use residential and
commercial structure, and that is owned and operated by the
landlord of the structure or the landlord's agent. As used
in this section, "multiunit residential structure" and
"mixed-use residential and commercial structure" mean real
property containing two or more dwelling units.
h) "Water service" includes any charges, whether presented
for payment on local purveyor bills, tax bills, or bills
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from other entities, related to water treatment,
distribution, or usage, including, but not limited to,
water, sewer, stormwater, and flood control.
i) "Water purveyor" means any person who furnishes water
service to another person.
9)Provides that a submetering system that measures only a
portion of a dwelling unit's water usage, including, but not
limited to, a system that measures only hot water usage, is
not subject to this chapter if the system was first put in
service before January 1, 2018.
10)Specifies that properties that use submeters to separately
bill tenants for water service must satisfy all of the
following requirements:
a) Be inspected, tested, and verified for commercial
purposes;
b) Conform to state laws regarding installation,
maintenance, repair and use and to rules and regulations
governing devices that weigh and measure;
c) Are installed and operated in compliance with
specifications for measuring devices;
d) Only measure the exclusive water use of that dwelling;
e) Be reinspected and recalibrated within the time limits
specified in law or regulation; and
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f) Are accessible to tenants and can be read by the
landlord without entering the dwelling.
11)Specifies water purveyors are not responsible for ensuring
compliance with installation, certification, maintenance, and
testing of water submeters and associated onsite plumbing.
12)Provides that, unless the water purveyor or local government
is operating under an ordinance or regulation requiring
individual metering, the owner is required to install and read
submeters, unless the water purveyor agrees to install and
read individual meters.
13)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.
14)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
submeter malfunctions, among other provisions.
15)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).
16)Specifies that the monthly bill for water service may only
include four charges:
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a) A charge for volumetric usage, which may be calculated
in any the following ways:
i) The amount shall be calculated by first determining
the proportion of the tenant's usage, as shown by the
submeter, to the total usage as shown by the purveyor's
billing. The dollar amount billed to the tenant for
usage shall be in that same proportion to the dollar
amount for usage shown by the purveyor's billing.
ii) If the purveyor charges for volumetric usage based
on a tiered rate schedule, the landlord may calculate the
charge for a tenant's volumetric usage, as specified, or
the landlord may instead divide each tier's volume evenly
among the number of dwelling units, and the rate
applicable to each block shall be applied to the
consumption recorded for each dwelling unit.
iii) If the purveyor charges the property rates on a
per-dwelling unit basis, the tenants may be charged at
those exact per unit rates.
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.
17)Does not prevent the landlord or the landlord's billing agent
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from using one bill to cover multiple lawful charges,
including rent, to the same tenant.
18)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
ending the tenancy, or as specified.
19)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.
20)Gives the landlord 30 days to comply with any change in how a
tenant requests to receive a bill.
21)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.
22)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.
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c) The location of the submeter.
23)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.
24)Requires a landlord who is notified of leaks or other
conditions causing water consumption or a submeter reading
indicating constant or abnormal water usage to repair the
condition within 21 days or be:
a) Restricted to charging the tenant, for the period after
the 21 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.
25)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.
26)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
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shall be $0.50. If readings remain unavailable for six
months, the volumetric use charge shall be zero.
27)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.
28)Provides that the total late fee imposed in any 12-month
period upon the amount of a bill that remains unpaid cannot
exceed 10% of the unpaid amount exclusive of administrative
fees.
29)Allows a landlord, under specified circumstances, to deduct
from the security deposit late bills or bills of tenants who
have vacated.
30)Allows a bill that is 30 days overdue to constitute a curable
material breach of the lease that gives the landlord the right
to terminate the tenancy.
31)Allows, if the water bill remains unpaid for 180 days or the
amount of the unpaid water bill equals or exceeds $200, a
landlord to terminate the tenancy in accordance with state law
with the service of a three-day notice to pay or quit upon the
tenant.
32)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.
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33)Provide that a final occupancy permit for a building shall
not be denied by a local building official if water submeters
or meters have not been installed for each residential unit as
required by this chapter if the building owner can demonstrate
either of the following:
a) Water submeters have been ordered and were delayed by
the manufacturer; or
b) Water submeters for the building were submitted to a
county sealer and are awaiting approval for use.
c) After issuance of the occupancy permit, the owner shall
ensure that the submeters are installed in the building
within 120 days of approval by the county sealer.
34)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.
35)Prohibits the waiver of any of the provisions established
under this chapter and makes any purported waiver void.
36)Provides that nothing in this chapter shall be construed to
state a legislative policy favoring or disfavoring the use of
a ratio utility billing system.
37)Requires the Department of Housing and Community Development
(HCD) to develop requirements for the installation of water
submeters in newly constructed multiunit residential
structures and mixed use residential and commercial structures
including specifying when such installation is infeasible and
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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, 2018.
38)Exempts long-term health care facilities, low-income housing,
residential care facilities, student dormitories, and
time-share properties from the requirement to submeter.
39)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 United States Housing Act
of 1937 Section 8 or, under specified circumstances, an
equivalent.
40)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, 2018 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.
41)Requires submeters to be installed by one of the following:
a) A contractor licensed by the Contractors State License
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Board who employs at least one journey person who has
graduated from a state-approved apprenticeship program; or
b) A service agency that has registered with the Department
of Food and Agriculture.
42)States the intent of the Legislature to preclude the adoption
and preempt the operation of an ordinance or regulation
adopted after January 21, 2013, that regulates the type of
approved submeters, their installation, maintenance, reading,
billing, and testing and associated onsite plumbing.
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.
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.
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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.
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
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, 2018. 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.
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This bill 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 or a service agency
registered with the Department of Food and Agriculture.
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."
Related legislation:
SB 750 (Wolk) of 2014: The 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. The bill
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failed passage in the Assembly Water, Parks, and Wildlife
Committee.
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 2012: The 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. The bill
failed passage in the Assembly Housing and Community Development
Committee.
AB 1975 (Fong) of 2010: The bill would have required HCD to
adopt building standards requiring installation of individual
water meters and submeters in newly constructed multiunit
residential buildings. The bill died on the suspense file in
the Senate Appropriations Committee.
AB 1173 (Keene) of 2008: The bill would have required submeters
in multiunit residential structures built after January 1, 2010.
The bill died on the suspense file in the Assembly Committee on
Appropriations.
Analysis Prepared by:
Lisa Engel / H. & C.D. / (916) 319-2085 FN:
SB 7
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