BILL ANALYSIS
SB 1035
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1035 (Hancock) - As Amended: June 10, 2010
Policy Committee: JudiciaryVote:7-3
Local Government 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill allows a Municipal Utility District (MUD) to attach a
property lien on owners of single family or multi-family
residential property for delinquent water and sewer payments
(and associated interest and penalties). Specifically, the bill:
1)Requires that, in order to place a lien on the property, the
MUD must: (a) file a report with the district's board of
directors describing the affected property and the amount of
delinquent payments; (b) give notice of the filing in a
newspaper and by mailing the notice to each affected parcel;
and (c) have a public meeting, where the board of directors
considers objections or protests to the report and makes a
determination regarding each affected parcel.
2)Applies only in cases where the account for water or sewer
services is held by the owner of the property. The lien
authority does not apply when the account is held directly by
the tenant.
3)Requires the MUD to reimburse the county for the reasonable
expenses related to the recording of liens.
4)Requires districts that place liens of property for unpaid
water or sewer service to submit a report to the Assembly and
Senate committees on local governments, by December 31, 2014,
which discusses the number and effectiveness of the liens
placed on property owners for unpaid sewer and water
obligations by tenants or leasees.
5)Sunsets on January 1, 2016.
SB 1035
Page 2
FISCAL EFFECT
No state impact, as the judgment liens would have lower priority
than county liens issued for unpaid property taxes, and local
costs to county auditors reimbursed by payments from the
utility.
COMMENTS
1)Background . There are five municipal utility districts in
California: East Bay, Lassen, Sacramento, South Placer, and
Southern San Joaquin. Municipal utility districts can provide
various utility services, including electricity, water, sewer,
garbage disposal, transportation, and communications. Of
these districts, only East Bay MUD and South Placer MUD
provide sewer service, and only East Bay MUD also provides
water service. Most water and sewer services are provided
through special districts. Existing statutes authorize the
majority of these districts to attach liens on residential
property for unpaid water and sewer payments. East Bay Mud is
seeking the same authority for municipal utility districts.
2)Rationale . The purpose of the bill is to allow East Bay MUD to
attach liens as an alternative to raising other water rates or
shutting off services to delinquent users. Alameda County, a
cosponsor of the bill, asserts that it is experiencing a sharp
increase in the occurrences of blight in the County.
According to the County, "blighted property can lower the
values of nearby properties, decrease safety and impact area
businesses. The decay of an abandoned property not only
affects the property itself, but can also affect the
livability of the entire community. One of the best ways to
avoid crippling blight and the associated economic impacts on
businesses and the community is to prevent vacant buildings
from ever appearing abandoned. This can be as simple as
maintaining the exterior." According to East Bay MUD, there
were over 7,000 delinquent accounts in 2009, totaling nearly
$3 million in unpaid charges - more than double the amount of
delinquencies in 2006.
3)Related legislation . AB 1333 (Hancock, 2008) also allowed MUDs
to attach liens on residential properties for unpaid
obligations for water and sewer services. The bill was vetoed
by the governor, who expressed concern that allowing utility
SB 1035
Page 3
liens for water and sewer services could increase costs
associated with foreclosed property and allow utilities to
benefit at a time of financial hardship for many property
owners.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081