BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 188|
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THIRD READING
Bill No: SB 188
Author: Hancock (D), et al.
Amended: 4/14/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/8/15
AYES: Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley
SENATE JUDICIARY COMMITTEE: 6-1, 4/21/15
AYES: Jackson, Moorlach, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/4/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Municipal utility district: utility charges:
delinquencies
SOURCE: Author
DIGEST: This bill 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.
ANALYSIS:
Existing law:
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1)Authorizes Municipal Utility Districts (MUDs) to collect
delinquent residential water and sewer service charges through
a lien or the local property tax roll, in the case of
master-metered multi-family residential buildings, in which
the utility account is in the landlord's name.
2)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.
3)Prohibits MUDs from attaching a lien to publicly owned
property.
4)Requires a MUD to do the following before collecting
delinquent charges through a lien or the property tax roll:
a) Adopt a relevant resolution or ordinance.
b) Prepare a report.
c) Provide notice.
d) Conduct a public hearing.
e) File a final report with the county auditor; and
f) Record a certificate in the office of the county
recorder.
This bill:
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1)Repeals the sunset date in the statute that allows MUDs to
impose liens on properties for delinquent water and wastewater
service charges, and to collect delinquent charges through
county property tax rolls, extending MUDs' authority to
continue its lien program indefinitely.
2)Makes an uncodified statement of the Legislature's intent not
to change existing law regarding the protection provided to a
property owner pursuant to Section 12822.6 of the Public
Utilities Code, which prohibits a MUD from collecting
delinquent charges or penalties from a property owner accrued
by a residential tenant in a nonmaster-metered building.
Background
There are at least two types of public utilities in California:
"municipally owned utilities," which are public utilities owned
by cities, and MUDs, which are special districts organized for
the purpose of providing utility service. There are hundreds of
municipally-owned utilities in the state, but there are only two
major MUDs: the East Bay Municipal Utility District (EBMUD),
which provides water and sewer service, and the Sacramento
Municipal Utility District (SMUD), which provides electrical
service.
Prior to 1996, municipal utilities and MUDs had the authority to
require that a new service account be established in a
landlord's or property owner's name rather than a tenant's name
when a previous tenant had been delinquent in payment for
services under an account established in the tenant's name. The
law also authorized MUDs to impose liens against property when a
tenant's account for certain services was delinquent. By 1996,
the lien authority of MUDs had been limited so as not to apply
to delinquencies for water service to residential property or
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electrical service. At the time, property owners had complained
that it was unfair to require them to assume responsibility for
utility services provided to a tenant for delinquent charges to
a tenant's account. In 1998, SB 2166 (Costa, Chapter 739,
Statutues of 1998) further limited the MUDs lien authority to
exclude liens based on delinquent charges for sewer service.
In a reversal of that longstanding exemption, SB 1035 (Hancock,
Chapter 485, Statutes of 2010) authorized MUDs, until January
1, 2016, to file liens on residential real property for unpaid
water and sewer utility charges rendered to a lessee, tenant, or
subtenant. In order to impose such a lien, however, SB 1035
required MUDs to observe certain due process requirements to
ensure property owners had notice of and an opportunity to
contest proposed liens.
This bill eliminates the January 1, 2016, sunset date enacted in
SB 1035, and extends indefinitely the authority for MUDs to lien
residential property for the nonpayment of charges for services
rendered to a lessee, tenant, or subtenant for water or sewer
service. This bill would not affect the lien exemption in
current law for delinquent fees or charges for the furnishing of
electrical service, and would not apply to delinquent charges or
penalties accrued by residential tenants in nonmaster-metered
buildings.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee this bill has
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.
SUPPORT: (Verified5/5/15)
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Alameda County
Association of California Water Agencies
California Special Districts Association
East Bay Municipal Utility District
OPPOSITION: (Verified5/5/15)
Apartment Association
California Southern Cities
Apartment Association of Orange County
East Bay Rental Housing Association
Nor Cal Rental Property Association
North Valley Property Owners Association
ARGUMENTS IN SUPPORT: The author writes:
[East Bay Municipal Utility District]'s authority to
collect delinquent residential charges via liens and
the property tax rolls is set to expire January 1,
2016. This authority has provided EBMUD with a
viable alternative to terminating service and
burdening other ratepayers with subsidizing the cost
of these delinquent accounts. As indicated in the
report to the legislature, since EBMUD has been
exercising the SB 1035 authority, collections have
increased from about 15 [percent] to over 90
[percent] and EBMUD has not terminated water service
to any master-metered multi-family residential
buildings for nonpayment. Prior to the SB 1035,
EBMUD terminated the service to about 400
master-metered multi-family residential accounts each
year due to non-payment of bills. If this authority
sunsets, EBMUD's options for addressing delinquent
accounts would be narrowed to terminating service and
unfairly burdening other ratepayers to make up the
difference for delinquent accounts.
ARGUMENTS IN OPPOSITION: Opponents argue tenants should be
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responsible for ensuring prompt payment of their utility bills.
If they fall delinquent, they alone should be accountable for
any repercussions. Property owners do not object to liens on
property when the landlord or an owner-occupant fails to pay his
or her own utility bill. Landlords, however, should not be held
responsible for a tenant's delinquent utility bill.
Prepared by:Toren Lewis / GOV. & F. / (916) 651-4119
5/6/15 16:16:14
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