BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                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








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          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  








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            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  








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            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  








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            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









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           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


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