BILL ANALYSIS
SB 2127
Page 1
Date of Hearing: June 20, 2000
ASSEMBLY COMMITTEE ON JUDICIARY
Sheila James Kuehl, Chair
SB 2127 (Bowen) - As Amended: June 15, 2000
SUBJECT : LANDLORD TENANT: DISCLOSURE; CHARGES FOR WATER AND
SEWER SERVICES
KEY ISSUES :
1)SHOULD A LANDLORD WHO ALLOCATES WATER AND SEWER CHARGES IN
ADDITION TO THE MONTHLY RENT FOR EACH TENANT'S UNIT, BUT WHO
DOES NOT PROVIDE A SEPARATE METER FOR EACH UNIT, BE REQUIRED
TO NOTIFY TENANTS OF THIS ADDITIONAL CHARGE?
2)SHOULD SUCH A LANDLORD, IN A MONTH-TO-MONTH TENANCY, BE
REQUIRED TO PROVIDE 60 DAYS NOTICE BEFORE ASSESSING NEW OR
INCREASED WATER AND SEWER CHARGES OR ALTERING ANY PREVIOUSLY
AGREED-TO BILLING ARRANGEMENTS REGARDING THOSE CHARGES?
SUMMARY : Seeks to inform current and prospective tenants about
separate charges for water and sewer services. Specifically,
this bill :
1)Requires landlords who allocate water and sewer charges in
addition to the monthly rent for each tenant's dwelling unit,
but who do not provide a separate meter for each unit, to do
the following:
a) Prior to the inception of any tenancy, the landlord must
explicitly disclose any separate water and sewer billing
arrangements in the lease or rental agreement;
b) If a specific rental rate is advertised, the landlord
must disclose, in the advertisement, any separate water and
sewer billing arrangements; and
c) In any month-to-month tenancy, the landlord must give
written notice at least 60 days prior to assessing new or
increased water and sewer charges or altering any
previously agreed-to billing arrangements regarding water
and sewer charges.
2)Does not apply to any units subject to local rent control or
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stabilization laws, statutes, ordinances or regulations.
3)Contains language stating that it is the intent of the
Legislature not to condone the practice by apartment owners of
billing tenants for water service without providing separate
metering for the individual apartments.
EXISTING LAW :
1)Permits a landlord to assess separate charges for gas and
electric services, but requires the landlord to make specified
disclosures and arrangements if the landlord does not provide
separate gas and electric meters for each tenant's dwelling
which measures the electric or gas service to that specific
dwelling unit. (Civil Code section 1940.9.)
2)Provides that, in general, residential tenancies are either
for a periodic term, such as a month-to-month tenancy pursuant
to a rental agreement, or for a fixed term, such a one-year
lease agreement. In month-to-month tenancies, any term of the
tenancy may be changed on written notice of at least 30 days.
(Civil Code section 827.) In lease agreements, the terms of
the lease are fixed at the time of the agreement, and may be
changed upon pursuant to its terms or upon mutual agreement of
the parties.
FISCAL EFFECT : The bill as currently in print is not keyed
fiscal.
COMMENTS : According to the author, many older apartment
complexes (pre-1980) have only one water and sewer meter for the
entire building. Traditionally, landlords of these buildings
have included the costs of these utilities in the rents charged
for a unit in the building.
According to the author, landlords of newer buildings with
individually metered units, on the other hand, use that feature
to offer lower rents. Instead of bundling the water and sewer
charges with the rent into one price, the landlord offers an
"unbundled" lower rent that does not include the separate water
and sewer charges. The author asserts that this has resulted in
a situation where landlords of older buildings with single
meters charge tenants water and sewer costs based on a
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percentage of the landlord's water and sewer bill, rather than
actual usage. The author states:
Now, in an effort to keep up with newer buildings that
have individually metered units and can offer lower
rents, some 'single meter' landlords are trying to spread
out their water and sewer costs by breaking these charges
out separately from the total rent and assigning a
percentage of the bill to each tenant, or by charging a
flat fee. The landlord then 'bills' the tenant on a
periodic basis and the tenant pays the landlord directly
for these services.
The problem is without separate billing meters, landlords
dividing these costs up have no way of knowing what each
tenant's exact usage is - so they are estimating or
creating a formula based on the number of people in each
unit, square footage of units etc. Consumers in this
situation have no idea if they are being overcharged for
water. Granted, that sort of happens today when water is
rolled into a rental charge, but it's more egregious
under this system because: 1) it varies from month to
month instead of being built into the same monthly rental
fee; and 2) the variation is based on the usage of the
entire complex, not just the individual tenant. ?
Billing is calculated using a number of techniques, but
the bottom line is tenants aren't charged on the basis of
what they use, but on a percentage of the landlord's
bill. The charge varies from month to month depending on
the actual usage of water by the entire apartment
complex, not of the individual tenant. So a tenant who
trues to conserve water could actually see his/her bill
go up if fellow tenants don't conserve water as well. ?
A flat fee, as part of rent - or even separate from rent
- is easy for a tenant to understand and makes monthly
bills predictable. But to apportion a bill based on the
monthly usage of the entire complex is unpredictable and
patently unfair to the tenant.
The author notes that tenant complaints about these water and
sewer charges are currently being addressed by the California
Public Utilities Commission (PUC), which is expected to issue a
decision on the lawfulness of the practice this summer. The
bill thus contains language noting that the PUC is currently
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investigating whether apartment owners may lawfully bill tenants
for water service without providing separate metering for the
individual apartments.
ARGUMENTS IN SUPPORT : Both the Western Center on Law and
Poverty and the California Rural Legal Assistance Foundation
support the bill, stating:
Tenants - many of whom live on limited incomes - need to
be aware of the 'true' monthly rent before traveling to
the rental to inspect it. A rental advertisement could
significantly understate the monthly charges if the water
and sewer charges were excluded. This omission could
make price comparisons difficult, and, at a minimum,
could result in frustration after a long bus or car trip
when the tenant discovered that these charges were not
included in the rent. The monthly rental rate could in
fact be much higher than the advertisement revealed. We
support your effort with SB 2127 to ensure that tenants
are made aware of this new procedure of separate charges.
In support of the bill, the Los Angeles Housing Law Project
notes that it "does not support the billing by landlords of
separate utility charges. However, if landlords are going to be
allowed to bill for utilities tenants should be informed in
advance of the practice. SB 2127 will ensure that tenants
[know] at the outset of a lease that [they] will be incurring
utility charges."
ARGUMENTS IN OPPOSITION : The California Apartment Association
(CAA) opposes the bill, arguing that recent amendments providing
that it is the intent of the Legislature not to condone the
practice by apartment owners of billing tenants for water
service without providing separate metering for the individual
apartments has left its members "very uncomfortable." CAA
asserts that it believes that the intent language is not neutral
as written, stating that:
There is no equilibrium in the statement that the
Legislature does not "condone" the practice by
apartment owners of "billing tenants for water service
without providing separate metering for the individual
apartments." A more equitable approach would be to
include language that indicates the Legislature does
not condone "or prohibit" this practice. We also
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propose that you strike the language included on page 3
at line 13 through 15, which reads "(c) Nothing in this
section authorizes apartment owners to bill tenants for
water without providing separate metering for the
individual apartments."
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation
Los Angeles Housing Law Project
Tenderloin Housing Clinic
Western Center on Law and Poverty
Opposition
California Apartment Association
Analysis Prepared by : Saskia I. Kim / JUD. / (916) 319-2334