Sacramento Report
By Ron Kingston

Landlords that have master water meters who currently “sub meter” or anticipate that they will “sub meter” the cost of water to tenants, may be quite interested in reading about a bill pending in the Legislature.

AB 1173 (Keene) proposes to require all new multi-family properties to have separate water meters to each dwelling unit and all existing rental properties that currently have a master water meter that obtain a building permit to repair a dwelling to have separate water meters for each dwelling. The bill also permits landlords of existing multiunit residential structure that have a master water meter to charge tenants separately for water service.

Specifically, the bill requires all new water service for newly constructed multi-family buildings built on and after January 1, 2010 to have a separate water meter on each rental unit except for high-rise structures where submeters are infeasible. Some landlords argue that this will promote water conservation by tenants. Other landlords argue that the “world order of things” cannot be broken down that easily. Consider duplexes, triplexes, or fourplexes that house one family that do not rent out any unit. They will be forced to have the contractor install separate water meters. Under that circumstance, it will not promote water conservation, it will increase the purchase price of the dwelling and the family will receive multiple water bills every billing period. Even in larger complexes, landlords may not be driven to promote water conservation such as installing water conservation devices.

Tenants do not embrace the bill because they argue that the overall cost of renting a unit will go up. Countering that argument by the landlords that support the bill, suggests that overall profit may increase should a landlord be required to have separate water meters on newly constructed units. The overriding question should be: why force individual water meters to be installed on every newly constructed dwelling? Why can’t landlords make their own decisions during construction?

The other section of the bill immediately affects every landlord that has a master water meter because the next time the landlord makes any repair or improves the property in any manner that requires a building permit, the landlord will be forced to pay for the installation of separate water meters. So, the next time the water heater is replaced, the roof is repaired or replaced, electrical repairs are conducted or an air conditioner is replaced, the landlord will face a multi thousand dollar retrofit cost due to the terms of AB 1173.

The section of the bill that requires water meter retrofit may have other interesting consequences. On one hand, a cost shift from the landlord to the tenant may occur and on the other hand, incentives for making repairs to the water delivery system may “evaporate”.

The Apartment Association, California Southern Cities is opposed to the measure unless it is amended. We do not feel that it is in the best interest of landlords to be forced to re-plumb the entire water delivery system to install sub meters when an unrelated repair is to be made to the property. The bill therefore will have the effect of: encouraging landlords to modify their maintenance schedules; immediately realign profit and loss schedules, and face substantial cost recovery problems in rent control areas.

At the moment, the bill is stalled in the Assembly Appropriations Committee and faces an uncertain future for the year.

We are hopeful that if the bill is approved by that committee, that we will engage in successful negotiations with the sponsor, which is another apartment association!