BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 7 Hearing Date: 8/30/16
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|Author: |Wolk |
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|Version: |8/19/2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Housing: water meters: multiunit structures
DIGEST: This bill 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.
ANALYSIS:
Existing law:
1)Requires water service on all new residential housing to be
metered.
2)Provides that each water corporation with 500 or more service
connections that is not already subject to water metering
requirements under the existing Water Measurement Law must
install a water meter on each new service connection and must
retrofit each unmetered service connection by January 1, 2025.
3)Authorizes the California Building Standards Code (CBSC) to
approve and adopt building standards. Every three years a
building standards rulemaking is undertaken to revise and
update the CBSC (Title 24 of the California Code of
Regulations).
4)Requires that California achieve a 20% statewide per capita
reduction in urban water use by 2020, as compared to October
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2009 levels.
This bill:
1)Requires each water purveyor that provides 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 is metered or submetered as a
pre-condition for new water service. The landlord of the
newly constructed structure shall be required to install and
read the submeters unless the water purveyor agrees to install
them.
2)Requires the Department of Housing and Community Development
(HCD), on or after their triennial code cycle commencing on or
after January 1, 2018, to propose to the CBSC building
standards requiring the installation of water meters or
submeters in newly constructed multiunit residential
structures or mixed-use residential and commercial structures,
with specified exemptions.
3)Establishes numerous consumer protections for submetered water
service, such as:
a) The submeter must be inspected and tested
b) The submeter must be accessible by the tenant and
landlord without entering the dwelling unit
c) Before executing a rental agreement, a landlord shall
disclose that he or she intends to charge water service
separately from rent
d) The water bill may only include the cost of the measured
usage, the pro-rated portion of any fixed fee, a fee for
the landlord's cost of billing, and any late fees.
Specified disclosures, including contact information for
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the landlord or billing agent, must also be included
e) Late fees and administrative fees are limited
1)Requires that submeters be installed by licensed contractors
who employ at least one apprentice from a state-approved
apprenticeship program, or a registered service agency that
has registered with the Department of Food and Agriculture.
This requirement becomes inoperative once the CBSC adopts
building standards that require submetering.
2)Landlords may provide the tenant with a 3-day notice to pay
their water bill or terminate the tenancy if the tenant has
not paid their water bill for 180 days or the unpaid water
bill exceeds $200.
Comments
1)Purpose. 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. Water metering and volumetric pricing
are paramount to giving Californians an accurate price signal
about their water use. However, for most multiple-dwelling
housing units, such as apartments, water agencies do not
provide meters to individual units. Instead, there are master
meters for a group of dwelling units. The cost of water use is
included with the cost of rent, charged as a flat fee, or
allocated in some way among the residents connected to the
master meter. Residents in such dwelling units will not know
how much water they use unless their units are submetered.
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
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California's apartment renters, or 12.5 million Californians,
there is no correlation between water usage and cost. Studies
have shown that water sub-meters are associated with decreased
water usage. Submetering encourages water users to be more
aware of their usage, giving them a financial incentive to
conserve. Furthermore, leaks may be reported and fixed more
promptly if occupants are paying for water based on actual
usage. SB 7 would encourage responsible water consumption and
conservation by providing residents with accurate information
about the volume and cost of their water usage by requiring
the installation and operation of submeters in new multifamily
residential buildings. SB 7 has consumer protections which
address the maintenance of submeters, billing for water
service by property owners or third-party billers, and notices
and disclosures to tenants. It allows landlords to recover
the costs for billing tenants for water services.
2)Submetering. Most apartment houses are master-metered for
water; the rates are closely regulated. To the water utility,
the water customer is the landlord of the apartment building,
not the tenants of the individual apartments, and there is
generally only one meter for the aggregate usage of the
property. This makes it much easier for the utility in that
it has to service only one customer, the landlord, who
presumably recovers this cost in the rent. Because individual
tenants aren't billed for their water consumption, and don't
even know how much water they are using, there is little
incentive for tenants to conserve. Increasingly, new
apartment buildings have water meters installed for individual
apartments, a practice known as submetering.
Water submetering has many virtues. It benefits landlords,
who can charge tenants for the cost of water. It benefits
tenants, who can control their water cost based on usage. It
benefits water suppliers, as customers who are billed based on
usage use less. Studies show that submetering reduces water
use. A study jointly sponsored by the U.S. Environmental
Protection Agency, the National Apartment Association, and
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others<1> showed that individual submetering can reduce water
consumption by 15%. There is a cost for submetering. The
City of San Diego, which has required water submetering since
2010, estimated at that time that the cost of submetering
would be $150 to $300 per unit for a single submeter. That
cost range is apparently still valid today.
This bill requires new multifamily residential units and
mixed-use commercial and multifamily units, that request water
service after January 1, 2018, to install submeters, and for
landlords to bill for that usage, unless the water purveyor
(e.g., water utility or city water department) elects to do so
itself. It also requires the HCD to propose a water
submetering building standard during the next triennial
building code revision cycle, the practical effect of which is
that water submeters will be required for new construction of
specified multiunit buildings beginning January 1, 2020. This
bill does not require existing multifamily residential units
to install submeters.
3)Consumer protections. Submetering raises significant
financial and consumer protection issues just as are raised in
the provision of any essential utility service: who pays for
the submeters, where are they installed, who is responsible
for the accuracy of the meters and rendering the bill, what
are the proper consumer disclosures, what is the cost for
rendering the bill, what is an appropriate rate design, what
can be included in rates, how are disputes resolved, what are
the consequences for late payment, and others. Much of this
bill addresses those issues by establishing comprehensive
consumer protections.
4)Timing. This bill requires water submeters on new buildings
by January 1, 2018. It also requires the building standards
process to develop water submeter building standards on new
buildings, which will likely be in effect towards the end of
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<1> "National Multiple Family Submetering and Allocation
Billing Program Study," sponsored by United States
Environmental Protection Agency, National Apartment
Association, National Multi Housing Council, City of Austin,
City of Phoenix, City of Portland, City of Tucson, Denver Water
Department, East Bay Municipal Utility District, San Antonio
Water System, San Diego County Water Authority, Seattle Public
Utilities, and Southern Nevada Water Authority; 2004.
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2020. During the interval when water submeters are required
and water submeter building standards aren't established, the
building industry can use existing commercially available
submeters installed to manufacturers' specifications.
Also during this interval, the installation of submeters must
be performed by either:
a) A contractor licensed by the Contractors' State License
Board who employs at least one journey person who has
graduated from a state-approved apprenticeship program
b) A registered services agency that has registered with
the Department of Food and Agriculture. A registered
services agency is any entity that repairs commercial
devices for weighing or measuring and is registered with
the Secretary of Food and Agriculture.
1) Local preemption. This bill preempts any water
submetering ordinances or regulations adopted subsequent to
December 31, 2012. At least eight California cities
currently have submetering ordinances, most adopted before
the preemption deadline. Long Beach adopted its ordinance
after December 31, 2012 but the provisions in this bill are
substantially similar regarding where submetering is
required.
Related/Prior Legislation:
AB 750 (Wolk, 2013) - 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. This bill would have included a cap on the
administrative fees that landlords can charge a tenant for
billing for water. This bill failed passage in the Assembly.
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AB 19 (Fong, 2011) - 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. This bill
failed passage in the Assembly.
AB 1975 (Fong, 2010) - this bill would have required the HCD to
adopt building standards requiring installation of individual
water meters and submeters in newly constructed multiunit
residential buildings. This bill failed passage in the Senate.
AB 1173 (Keene, 2007) - this bill would have required submeters
in multiunit residential structures built after January 1, 2010.
This bill failed passage in the Assembly.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
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 the 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.
POSITIONS: (Communicated to the committee before noon on
Friday, August 26, 2016.)
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SUPPORT:
American Utility Management
California Apartment Association
California Association of Realtors
California Building Industry Association
California Business Properties Association
California League of Conservation Voters
California Municipal Utilities Association (prior version)
California Rural Legal Assistance Foundation
Conservice
East Bay Municipal Utility District
Friends of the River
NWP Services Corporation
Paul Wermer Sustainability Consulting (prior version)
Santa Clara Valley Water District (prior version)
Sierra Club California
U.S. Green Building Council, California (prior version)
Western Center on Law and Poverty
OPPOSITION:
None received
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