BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 7| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 7 Author: Wolk (D), et al. Amended: 8/19/16 Vote: 21 SENATE TRANS. & HOUSING COMMITTEE: 11-0, 4/14/15 AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 4-1, 4/27/15 AYES: Lara, Bates, Hill, Mendoza NOES: Nielsen NO VOTE RECORDED: Beall, Leyva SENATE TRANS. & HOUSING COMMITTEE: 11-0, 8/30/16 (Pursuant to Senate Rule 29.10) AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski SENATE FLOOR: 28-7, 5/4/15 AYES: Allen, Bates, Beall, Block, Cannella, De León, Gaines, Galgiani, Hall, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Nguyen, Pan, Roth, Wieckowski, Wolk NOES: Anderson, Fuller, Morrell, Nielsen, Runner, Stone, Vidak NO VOTE RECORDED: Berryhill, Hancock, Lara, Pavley ASSEMBLY FLOOR: 29-28, 9/8/15 (FAIL) - See last page for vote ASSEMBLY FLOOR: 51-24, 8/25/16 - See last page for vote SUBJECT: Housing: water meters: multiunit structures SOURCE: Author SB 7 Page 2 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. Assembly Amendments require that new multifamily residential units or mixed commercial and multifamily units install submeters and establish comprehensive tenant protections and landlord rights regarding the submetering. ANALYSIS: Existing law authorizes the Department of Housing and Community Development (HCD) to develop building standards and to submit those standards to the California Building Standards Commission (BSC) for approval. 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 be 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)Establishes numerous consumer protections for submetered water service, including meter accuracy, notice and disclosure to tenants, limitations on what can be included in the submetered water bill, a mechanism to notice leaks and provide bill protection to tenants, limitations on late fees, and protections regarding eviction in the event of failure to pay the water bill. 3)Requires that submeters be installed by licensed contractors SB 7 Page 3 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 California Building Standards Commission (BSC) adopts building standards that require submetering. 4)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 BSC building standards requiring the installation of water meters or submeters in newly constructed multiunit residential structures or mixed-use residential and commercial structures. Comments 1)Purpose. The author states that "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." 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 SB 7 Page 4 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 others showed that individual submetering can reduce water consumption by 15%. ["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.] 3)Consumer protections. Submetering raises significant financial and consumer protection issues: who pays for the submeters, where are they installed, who is responsible for the accuracy of the meters and rendering the bill, what is the cost for rendering the bill, what is an appropriate rate design, how are disputes resolved, etc. This bill addresses those issues by establishing comprehensive consumer protections. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee: 1)HCD administrative costs of $244,000 over two years ($127,000 SB 7 Page 5 in the first year, $114,000 in the second year) for one 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 increaseS 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. SUPPORT: (Verified8/25/16) American Utility Management California Apartment Association California Association of Realtors California Building Industry Association California Business Properties Association California League of Conservation Voters California Rural Legal Assistance Foundation Conservice East Bay Municipal Utility District Friends of the River NWP Services Corporation Sierra Club California Western Center on Law and Poverty OPPOSITION: (Verified8/25/16) None received SB 7 Page 6 ASSEMBLY FLOOR: 29-28, 9/8/15 (FAIL) AYES: Baker, Burke, Chau, Chiu, Chu, Eggman, Gomez, Gonzalez, Gordon, Gray, Holden, Jones-Sawyer, Levine, Lopez, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Rendon, Ridley-Thomas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Atkins NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Dahle, Beth Gaines, Gallagher, Gatto, Grove, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Perea, Steinorth, Wagner, Waldron, Wilk, Wood NO VOTE RECORDED: Alejo, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chávez, Cooley, Cooper, Dababneh, Daly, Dodd, Frazier, Cristina Garcia, Eduardo Garcia, Gipson, Hadley, Roger Hernández, Irwin, Low, Rodriguez, Salas ASSEMBLY FLOOR: 51-24, 8/25/16 AYES: Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Ridley-Thomas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Bigelow, Brough, Chang, Chávez, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Patterson, Salas, Steinorth, Wagner, Waldron, Wilk NO VOTE RECORDED: Burke, Dahle, Kim, Linder, Rodriguez Prepared by:Randy Chinn / T. & H. / (916) 651-4121 8/30/16 20:28:22 **** END **** SB 7 Page 7