BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 188 (Hancock) - Municipal utility district: utility charges:
delinquencies
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|Version: April 14, 2015 |Policy Vote: GOV. & F. 7 - 0, |
| | JUD. 6 - 1 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 4, 2015 |Consultant: Mark McKenzie |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: SB 188 would repeal the sunset date on provisions
authorizing municipal utility districts (MUDs) to collect
delinquent water and sewer service charges through the property
tax rolls after recording a lien on the property, as specified.
Fiscal
Impact: No state fiscal impact. Any costs incurred by county
officials related to the recording of liens and collection of
delinquent service charges through the tax roll must be paid by
the utility district, and are not reimbursable from the state.
SB 188 (Hancock) Page 1 of
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Background: Existing law provides for the formation of MUDs to supply
utility services, such as electricity, water, sewer, telephone
and other communications, garbage disposal, and transportation,
to inhabitants and public agencies in the district. There are
currently five MUDs in the state: East Bay, Lassen, Sacramento,
South Placer, and Southern San Joaquin.
Existing law authorizes an MUD to record a lien on real property
to require a property owner to pay fees, tolls, rates, rentals,
or other charges for services rendered to a lessee, tenant, or
subtenant, as specified. Prior to 2011, however, state law
prohibited MUDs from recording a lien on real property to
require the collection of delinquent fees or charges for water
or sewer service to residential property, or for electrical
service. Existing law prohibits public utilities from
collecting 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. This prohibition does not
apply to master-metered apartment buildings in which the utility
account is in the landlord or property owner's name.
SB 1035 (Hancock), Chap 485/2010, authorized MUDs to record a
lien on real property for delinquent water and sewer charges and
to collect delinquent charges through the property tax rolls
until January 1, 2016. Prior to engaging in this collection
activity, the district must adopt an ordinance or resolution
authorizing the collection of charges in this manner, prepare a
report identifying affected parcels, provide public notice, hold
a public hearing to consider protests, file a final report with
the county auditor, and record a certificate of delinquent
charges in the office of the county recorder. The county tax
collector would include any recorded delinquent water and sewer
charges, including interest and penalties, on the tax bills of
affected parcels and collect these charges in the same manner as
property taxes. This statute requires the MUD to reimburse the
county for its reasonable expenses related to this
administrative process and to pay any applicable recording fees.
Proposed Law:
SB 188 (Hancock) Page 2 of
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SB 188 would repeal the January 1, 2016 sunset date and
indefinitely extend the authority for MUDs to record a lien on
real property for payment of delinquent water and sewer service
charges, and collect those delinquent charges through county
property tax rolls. The bill also explicitly states legislative
intent that the act is not intended to change existing law that
prohibits an MUD from collecting delinquent charges or penalties
from a property owner accrued by a residential tenant in a
nonmaster-metered building.
Related
Legislation: SB 1035 (Hancock), Chap 485/2010, authorizes MUDs
to collect delinquent water and sewer charges on the tax roll
after recording a lien on a utility customer's property for
payment of those charges until January 1, 2016.
Staff
Comments: In most local jurisdictions, water and wastewater
services are provided by special districts, the majority of
which are authorized to attach liens on residential property for
unpaid water and sewer payments. Of the five MUDs in
California, only East Bay MUD and South Placer MUD provide sewer
service, and only East Bay MUD provides both water and sewer
service.
Pursuant to the authority provided by SB 1035, East Bay MUD
adopted a lien program in 2011 to collect unpaid master-metered
multi-family residential delinquent water and sewer charges
through lien filings and property tax transfers. This program
is intended as an alternative to terminating water service to
tenants when a property owner does not pay delinquent charges.
East Bay MUD reports that, prior to the initiation of the lien
program, an average of 400 accounts were terminated per year
from 2006 through 2010 for unpaid delinquent charges. Of the
$1.2 million in delinquent unpaid charges that were referred to
a third-party for collections, about $1 million remains
unrecovered. In contrast, the district reports that a total of
3,779 liens representing $2.647 million in unpaid delinquent
charges were filed from January 2011 to July 2014. East Bay MUD
estimates that approximately 94 percent of these lien filings
will ultimately be collected, based on the average collection
rate since the inception of the program.
SB 188 (Hancock) Page 3 of
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This bill would provide for the indefinite extension of the
program established by SB 1035. Extending the delinquent
charges collection program would not result in any state costs
because all mandated local costs are recovered from
participating MUDs.
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