BILL ANALYSIS Ó
SB 7
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Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
SB
7 (Wolk) - As Amended July 7, 2015
SENATE VOTE: 28-7
SUBJECT: Housing: water meters: multiunit structures.
SUMMARY: Requires, as of January 1, 2017, 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. Specifies rights and
obligations between landlords and tenants. Specifically, this
bill:
1)Creates a new article in the Water Code regarding submetering
(submetering article) that requires each water purveyor that
sells, leases, rents, furnishes, or delivers 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, 2017 to
ensure each individual unit be metered or submetered as a
pre-condition to new water service. Prohibits the water
purveyor from imposing an additional capacity or connection
fee or charge for a submeter that is installed by an owner or
his or her agent.
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2)Exempts long-term health care facilities, low-income housing,
residential care facilities, student dormitories, and
time-share properties from the requirement to submeter.
3)Defines low-income housing as a building financed with tax
credits, tax-exempt mortgage bonds or other federal, state, or
local funds, as specified, and where 90% or more of the units
are occupied by lower income households, which is defined as
persons and families whose income does not exceed the
qualifying limits for housing under Section 8 of the United
States Housing Act of 1937 or, under specified circumstances,
an equivalent.
4)Allows the Department of Housing and Community Development
(HCD) to develop requirements for the installation of water
submeters in multiunit residential structures, including
specifying when such installation is infeasible and thus
exempt, such as potentially with high-rise multifamily
buildings and to propose those requirements for adoption by
the California Building Standards Commission (CBSC) in the
next regularly-scheduled update of the California Building
Standards Code that occurs on or after January 1, 2016.
5)Requires HCD to exempt long-term health care facilities,
low-income housing, residential care facilities, student
dormitories, and time-share properties in any building
standards it develops for submetering. Defines low-income
housing for the purposes of the exemption section.
6)Renders the submetering article inoperative (and thus
superseded) on the date that the CBSC includes submetering
requirements in the California Building Standards Code that
conform to the submetering article.
7)Adds a new Chapter to the Civil Code regarding "Water Service"
with findings that the purpose of this Chapter is to encourage
water conservation in multifamily residential buildings while
ensuring that practices for water service billing are just,
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reasonable, and include appropriate safeguards for both
landlords and tenants.
8)Defines "billing agent," "landlord," "property," "purveyor,"
"rental agreement," "renting," "submeter," "water service,"
and "water purveyor," for the purpose of the statute.
9)Specifies that properties that use submeters to separately
bill tenants for water service must ensure that meters and
submeters:
a) Conform to state rules and regulations governing devices
that weigh and measure;
b) Are installed and operated in compliance with
specifications for measuring devices;
c) Only measure the exclusive water use of that dwelling.
d) Are accessible to tenants and can be read by the
landlord without entering the dwelling.
10)Requires all plumbing fixtures within each dwelling to
conform to all laws regarding water conservation.
11)Specifies water purveyors are not responsible for ensuring
compliance with installation, certification, maintenance, and
testing of water submeters and associated onsite plumbing.
12)Requires a landlord that intends to charge a tenant
separately for water service to provide specified disclosures
in writing, in at least 10-point type, prior to executing a
rental agreement that include, but are not limited to:
information regarding calculation of the tenant's bill; due
dates, including any past-due fees that may be charged; and,
the tenant's rights regarding meter testing, leak repair, and
submeter malfunctions, among other provisions.
13)Provides that the amount of the water bill shall be
calculated by multiplying the water volume as determined by
the submeter for the billing period by the rate or rates for
the volumetric usage that are established by the water
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purveyor for residential use (volumetric use charge).
14)Specifies how the monthly bill for water service must be
calculated and that it may only include four charges:
a) A volumetric use charge based on the tenant's
proportional water use.
b) The tenant's portion of the fixed charges from the water
purveyor divided equally, or by proportion of volumetric
use charge, among all property units.
c) A billing, administrative, or other fee for the
landlord's and billing agent's costs, that is no more than
$4.75 or 25% of the amount billed, whichever is less.
Beginning January 1, 2018, allows a billing fee percentage
increase but limits it to no more than the Consumer Price
Index California fiscal year average for the previous year.
d) A late charge, as specified.
15)Does not prevent the landlord or the landlord's billing agent
from using one bill to cover multiple lawful charges to the
same tenant.
16)Requires meters to be read within three days of the same
point in each billing cycle and payments to be due at the same
point in each billing cycle. Requires that the submeter must
be read upon the tenant taking possession, within 5 days of
ending the tenancy, or as specified.
17)Allows a tenant to agree to be billed electronically but
prohibits a tenant from being compelled to receive electronic
bills. Requires the tenant be provided contact information for
questions regarding the bill including a local or toll-free
phone number and a statement on the bill that the landlord or
billing agent is not the water purveyor and the name of the
local water purveyor providing water service to the master
meter.
18)Does not allow a landlord to pass through water charges or
penalties that are imposed by a water purveyor on a landlord
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unless they are related to tenant's documented conduct.
19)Requires a landlord to make available, within 7 days from a
tenant's written request:
a) Information relating to the submeters inspection,
testing, and verification unless that information is
unavailable, in which case the landlord shall disclose it
is unavailable.
b) The data used to calculate the bill, as specified.
c) The location of the submeter.
20)Provides that if a water system in a dwelling unit does not
function properly, including plumbing leaks that allow
unnecessary water consumption or a malfunction submeter, the
landlord should investigate and, if warranted, repair the
condition. Prohibits a tenant from removing water fixtures or
water conservation devices installed by the landlord.
21)Requires a landlord who is notified of leaks or other
conditions causing water consumption or a submeter reading
indicating constant or abnormal water usage to repair the
condition within 14 days or be:
a) Restricted to charging the tenant, for the period after
the 14 days, $15 for the month's water use, or actual
usage, whichever is less; or,
b) Allowed, at the landlord's option, to charge a maximum
of 50 cents per day for those days between the two meter
readings, or actual usage, whichever is less, if there are
meter readings for both before and after the repair; and,
c) Prohibited from charging for volumetric water usage if
the condition is unrectified for 6 months after the
investigation.
22)Allows the landlord, consistent with current laws governing
landlord entry, to access the tenant's unit for purposes of
installing, reading, repairing, testing and maintaining a
submeter or repairing or testing a water fixture the tenant
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reports is in need of repair.
23)Provides that if a monthly submeter reading is unavailable,
the landlord shall advise the tenant and bill at a rate equal
to 75% of the tenant's average monthly use based on the three
prior months. If billing for the three prior months is
unavailable, the use charge for days that data is unavailable
shall be 50 cents. If readings remain unavailable for six
months, the volumetric use charge shall be zero.
24)Allows a landlord to impose a late fee of up to $7 for bills
overdue by 25 days and a late fee of up to $10 in each
subsequent bill if an amount remains unpaid. Requires partial
payments to be credited against the bill outstanding the
longest.
25)Allows a landlord, under specified circumstances, to deduct
from the security deposit late bills or bills of tenants who
have vacated. Allows a bill that is 30 days overdue to
constitute a material breach of the lease that gives the
landlord the right to terminate the tenancy.
26)Specifies that water service charges do not constitute rent
and that a landlord is prohibited from shutting off water to a
dwelling unit except as needed for repairs, replacements of
equipment, or maintenance.
27)Does not preclude or preempt ordinances or regulations
adopted prior to January 1, 2013, that govern the approval,
installation, maintenance, reading, billing, or testing of
submeters and onsite plumbing.
28)Prohibits the waiver of any of the provisions established
under this chapter and makes any purported waiver void.
EXISTING LAW:
1)Requires water service on all new residential housing to be
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metered.
2)Provides that each water corporation with 500 or more service
connections that is not already subject to water metering
requirements under the existing Water Measurement Law must
install a water meter on each new service connection and must
retrofit each unmetered service connection by January 1, 2025.
3)Authorizes the CBSC to approve and adopt building standards.
Every three years a building standards rulemaking is
undertaken to revise and update the California Building
Standards Code (Title 24 of the California Code of
Regulations).
4)Requires that California achieve a 20% statewide per capita
reduction in urban water use by 2020, as compared to October
2009 levels.
FISCAL EFFECT: Unknown. Senate Appropriations Committee
analyzed the bill prior to its amended form.
COMMENTS: The purpose of this bill is to promote water
conservation by making tenants in multiunit buildings aware of,
and billed in accordance with, their water usage.
1)Author's statement: 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."
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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)Background: For most multiple dwelling housing units, such as
apartments, water agencies do not provide meters to individual
units. Instead, there are master meters for a group of
dwelling units. The cost of water use to the multiple dwelling
units is included with the cost of rent, charged as a flat
fee, or allocated some way among the residents connected to
the master meter. A common way is to divide the master meter
bill by the number of units in the complex or to divide it
based on an occupant factor, square footage factor, or a
combination of both. Residents in such dwelling units will
not know how much water they use - or could save - unless
their units are submetered.
As the Pacific Institute highlighted in the report Waste Not,
Want Not: The Potential for Urban Water Conservation in
California, water conservation is the largest, least
expensive, and most environmentally sound source of water to
meet California's future needs. The installation of water
meters on multiunit residential and mixed use commercial
buildings has been shown to encourage increased conservation
by making homeowners, business owners, or renters aware of the
amount of water they are utilizing. Conceptually, this
legislation is similar to a draft ordinance requiring
submetering that was adopted by the City of San Diego on April
5, 2010. San Diego adopted its ordinance after a report from
the City of San Diego Office of the Independent Budget Analyst
found that multifamily units comprised 44% of the total
housing in San Diego, the trend was increasing, and
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multifamily properties achieved a 15% to 39% water savings
when submetered.
This bill would require installation of water submeters in all
newly constructed multi-residential dwellings, for which an
application for water connect is received, after January 1,
2017. This bill is prospective and does not require an owner
of an existing multifamily dwelling to install submeters,
retrofit existing submeters, or use existing submeters that
are currently unused.
3)Double-referred: This bill was heard in Assembly Housing and
Community Development prior to being substantially amended.
4)Prior and related legislation: SB 750 (Wolk) of 2013 was
substantially similar to this bill but did not include the
flexibility for HCD to propose submetering requirements in an
update to the California Building Standards Code.
On May 18, 2015, the California Department of Finance posted
language very similar to SB 750 as trailer bill proposal
number 826 to the Natural Resources and Capital Outlay area of
the Governor's 2015-16 Budget. The Governor's office grouped
the submetering requirement with other proposals addressing
drought but ultimately left the language out of the budget so
that it could continue to be vetted through this bill.
AB 19 (Fong) of 2011 was also substantially similar to SB 750
but did not include administrative fee provisions.
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Two other previous attempts to introduce submetering, AB 1975
(Fong) of 2010 and AB 1173 (Keene) of 2007, failed because of,
among other concerns, potential impacts to low income tenants.
5)Supporting arguments: Supporters note that "California is in
its fourth year of drought, which reminds us that the best and
most cost-effective drought response method is conservation"
but that "water conservation is made difficult by the fact
that many Californians do not have access to necessary
information on their own water use." Supporters state that
this bill will "help apartment dwellers track their water use,
and because people will pay their water bills directly (rather
than through their rent as is the common practice), they will
have an incentive to reduce wasteful practices. People living
in multiunit housing will be a critical part of the pictures
as California suppliers strive to reduce water use by 20
percent by 2020. This bill will give residents the tool they
need to make changes."
6)Opposing arguments: Opponents state that this bill will "set
a precedent for the allowance of meter installation beyond the
master meter by unskilled, untrained and possibly negligent
individuals for what would appear to be an attempt to simply
pass water accountability on to individual residents of an
apartment dwelling without any controls." Opponents seek
amendments that would require that submeters "be installed by
the water purveyor or other entity responsible for installing
the master water meter for the service connection" and to
allow the cost of the installation to be imposed on the water
user by the water purveyor.
7)Suggested Committee amendments: Committee staff suggests the
following amendments as technical cleanup to the bill:
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a) Civil Code section 1954.204(e)(2), page 6, lines 22-23,
requires the tenant to be advised that any fixed fees for
water service will be divided equally among all units.
However, section 1954.205(a)(2), page 7, lines 18-28,
allows two methods for dividing a fixed fee, either
equally, or based on the tenant's proportionally water use.
To correct the inconsistency the Committee staff
recommends revising Section 1954.204(e)(2), lines 22-23, as
follows:
(2) Payment of a portion of the fixed fee charged by the
purveyors for water service divided equally among all the
units at the property .
b) Civil Code section 1954.205(a)(3), page 7, line 36,
allows fees to be increased commensurate with the
"California fiscal year average." Committee staff suggests
clarifying that the fiscal year average is a Consumer Price
Index, as follows:
Beginning January 1, 2018, the maximum fee authorized by
this paragraph may be adjusted each calendar year by the
landlord, no higher than a commensurate increase in the
Consumer Price Index California fiscal year average for the
previous fiscal year, for all urban consumers, as
determined by the Department of Finance.
c) Water Code Section 537.2(a), page 15, lines 25-29,
states that it does not preclude or preempt a submeter
ordinance or regulation, as specified, if it was adopted
prior to January 1, 2013. However, the words "or
regulation" are accidentally omitted from line 28 and
should be corrected as follows:
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537.2. (a) This article does not preclude or preempt an
ordinance or regulation that regulates the approval of
submeter types or the installation, maintenance, reading,
billing, or testing of submeters and associated onsite
plumbing if the ordinance or regulation was adopted prior
to January 1, 2013.
Committee staff is not suggesting an amendment that would
mandate submeters on private property be installed by the
water purveyor because multiple water purveyors have contacted
the Committee staff in opposition to any such amendments.
REGISTERED SUPPORT / OPPOSITION:
Support
California Association of Realtors
California Building Industry Association
California Rural Legal Assistance Foundation
Sierra Club California
Sonoma County Water Agency
United States Green Building Council of California
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Western Center on Law and Policy
Opposition
California State Pipe Trades Council
Coalition of California Utility Employees
Analysis Prepared by:Tina Leahy / W., P., & W. / (916)
319-2096