BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |SB 188 |Hearing |4/8/15 |
| | |Date: | |
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|Author: |Hancock |Tax Levy: |No |
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|Version: |2/9/15 |Fiscal: |Yes |
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|Consultant|Lewis |
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Municipal utility districts' delinquent revenues
Repeals the sunset date in the statute giving municipal utility
districts indefinite authority to impose liens on properties for
delinquent water and wastewater services charges.
Background and Existing Law
Municipal Utility Districts (MUDs) are special districts that
provide their customers with a variety of utility services,
including electricity, water, sewer, garbage disposal,
transportation, and communications. There are five MUDs in
California: East Bay, Lassen, Sacramento, South Placer, and
Southern San Joaquin.
Until 2010, state law prohibited MUDs from using liens to
collect delinquent residential water or sewer charges. In 2010,
the Legislature authorized MUDs to collect delinquent
residential water and sewer service charges through a lien or
the local property tax roll (SB 1035, Hancock). MUDs' statutory
authority to use liens expires on January 1, 2016. Until then,
such liens have the force, effect, and priority of a judgment
lien. However, MUDs may not attach a lien to publicly owned
property. To collect delinquent charges through a lien or the
property tax roll, state law requires a MUD to:
Enact a relevant resolution or ordinance.
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Prepare a report.
Provide notice.
Conduct a public hearing.
File a final report with the county auditor; and
Record a certificate in the office of the county recorder.
State law prohibits public utilities from recovering unpaid
charges from a property owner if the charges are for residential
utility service provided to a tenant under an account
established by the tenant (AB 1770, Brewer, 1996). However, MUDs
may collect unpaid fees, charges, and interest from owners of
master-metered multi-family residential buildings, in which the
utility account is in the landlord's name.
Several other local government entities have the power to
collect unpaid residential utility charges, penalties, and
interest through liens and/or property tax collection: cities,
counties, California Water Districts, Community Services
Districts, County Water Districts, Irrigation Districts,
Municipal Water Districts, Public Utility Districts, and
Sanitary Districts.
The East Bay Municipal Utility District (EBMUD)-which provides
drinking water for 1.3 million customers in Alameda and Contra
Costa counties, and wastewater services for 650,000 customers in
the East Bay-adopted a lien program in January, 2011, to collect
unpaid water and wastewater charges. EBMUD now wants legislators
to repeal SB 1035's sunset date to allow EBMUD to continue its
lien program indefinitely.
Proposed Law
Senate Bill 188 repeals the January 1, 2016 sunset date in the
statute that allows municipal utility districts to impose liens
on properties for delinquent water and wastewater service
charges, and to collect delinquent charges through county
property tax rolls.
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State Revenue Impact
No estimate.
Comments
1.Purpose of the bill . Before adopting its lien program, EBMUD
had to collect unpaid water and wastewater charges from owners
of multi-family residential property by issuing a formal
notice, shutting off tenants' water, and suing the landlord
for past due balances. The lien authority granted by SB 1035
has given EBMUD an alternative to shutting off tenants' water
when their landlords fail to pay the bill. Since EBMUD
initiated its lien program, there have been no multi-family
residential service terminations for nonpayment, and the
collection rate for delinquent accounts has increased
significantly. SB 188 would allow EBMUD to continue its lien
program, granting MUDs the same statutory lien authority that
other special districts have under California law.
2.Property owners' concerns. Since 1996, state law has
prohibited MUDs from seeking to recover, from a property
owner, unpaid charges or penalties for residential services
provided to a tenant under an account established by the
tenant (AB 1770, Brewer). Some property owners are concerned
that, under a narrow reading of state law, MUDs could at some
point use liens and property tax rolls to recover past due
water and sewer charges from landlords when tenants fail to
pay their utility bills. The Committee may wish to consider
amending SB 188 to clarify that the bill is not intended to
alter or circumvent the prohibition enacted by the 1996 Brewer
bill.
Support and
Opposition (4/2/15)
Support : Alameda County; Association of California Water
Agencies; California Special Districts Association; East Bay
Municipal Utility District
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Opposition : East Bay Rental Housing Association; Nor Cal Rental
Property Association; Apartment Association of Orange County;
Apartment Association, California Southern Cities; North Valley
Property Owners Association
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