WATER RATE CALCULATION CHANGE IN LAW ALERT, FALLOUT FROM AB 1061 (LEE)

The recently enacted AB 1061 (2021) amended Civil Code §798.40 for those mobile home parks (MHPs) that provide water to submetered tenants and bill for water separately from rent. All master-metered MHP customers served by a municipality or a mutual water company are subject to this law. (AB 1061 does not apply to master-metered (MM) MHPs supplying water to submetered tenants when that MM MHP purchases its supply from a CPUC-regulated water company.) 

MM MHPs subject to the new law should pay special attention to the rate changes that must be implemented by June.  Failure to do so puts these MM MHPs at risk for penalties and potential attorneys’ fees under other provisions of the Mobilehome Residency Law (MRL). Many MM MHPs utilize third-party billing agents and will need to confirm that the new law is properly implemented in the water bills to submetered tenants.

The new Civil Code §798.40 eliminated some specific costs for which MM MHPs can charge submetered tenants if water is billed separately from rent.  New charges were added that were not permissible in the past.  Here are the changes:

The volumetric water charge can be calculated in either of two ways per §798.40 (c) (1). The first is to calculate the tenant’s share of the overall use and allocate the overall MHP bill in proportion to that use. This method will eliminate any rate tiers implemented by the water purveyor and create an overall average rate for the submetered customers. (This will also eliminate the incentives that rewarded more frugal water users for conservation and the penalties for those who are wasteful.) For the second method, if the water purveyor charges tiered rates, those tier allocations can be divided evenly among submetered customers and then charge for individual usage based on those tier allocations.

Under prior regulation, MM MHPs could charge a “ready to serve” component as part of water bills to submetered tenants that was equivalent to the same charge placed on other residential customers.  This has been altered under §798.40 (c) (1) and (2). Instead, this or any other fixed customer charge imposed by the water purveyor can, at the election of the MM MHP, be divided among submetered customers either via simple division or in proportion to water usage.

As of January 1, 2022, §798.40 (c) (3) allows billing for an “administrative fee”: “A billing, administrative, or other fee representing the combined total of management’s and the billing agent’s costs, which shall be the lesser of an amount not to exceed four dollars and seventy-five cents ($4.75), as adjusted pursuant to this paragraph, or 25 percent of the amount billed pursuant to paragraph (1).” Beginning January 1, 2022, the maximum fee authorized by this paragraph may be adjusted each calendar year by management, no higher than a commensurate increase in the Consumer Price Index based on a California fiscal year average for the previous fiscal year, for all urban consumers, as determined by the Department of Finance.”

§798.40 (c) (1) (C) allows that “(i)f the water purveyor charges the property rates on a per-mobilehome space basis, the homeowners may be charged at those exact per-mobilehome space rates.” Some utilities such as the Metropolitan Water District of Southern California assess property taxes as well as charge other fees, and these can be passed through on a pro-rata basis to submetered tenants.

The $4.75 ceiling has already been adjusted for CPI for 2022. This distinct calculation of the CPI can be found on the California Department of Finance webpage here: https://dof.ca.gov/forecasting/economics/economic-indicators/inflation/

Notably, the law clearly states in §798.40 (e), “(N)othing in this section shall be construed to prevent management from recovering its costs to install, maintain, or improve its internal water delivery system, as may otherwise be allowed in any rental agreement or local regulation.” So water system costs that were recovered by an MM MHP through the fixed water service charges can now be recovered directly through rents.

SB 940 (LAIRD), MEASURE TO REMOVE RENT CONTROL EXEMPTION, SET FOR JUNE 15 HEARING

SB 940 (Laird) will be heard in the Assembly Housing Committee on June 15. Opposed by WMA, SB 940 removes the rent control exemption for the new construction of spaces in local rent control ordinances.  WMA will continue to highlight the bill’s inequities in our overall campaign to defeat this harmful measure.     

Please click here to view SB 940 (Laird):

https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB940

MANDATORY MANAGER TRAINING BILL REFERRED TO ASSEMBLY HOUSING AND COMMUNITY DEVELOPMENT COMMITTEE

SB 869 (Leyva), the mandatory manager training bill, was referred to the Assembly Housing and Community Development Committee. WMA has already begun outreach to committee members and staff in advance of the upcoming formal hearing.

The latest amendments to SB 869 require HCD to adopt regulations to require at least one person per mobilehome park or recreational vehicle park employed or acting under contract as an onsite manager or assistant manager to receive 16 hours of training during the initial year and at least 6 hours of training in subsequent years. Questions surround the current bill language and whether HCD will have the means to meet this goal by the statutory language requiring a May 1, 2024, implementation date.

To view the full text of SB 869, please visit the following link: 

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202120220SB869.

ASSEMBLYMEMBER ROBERT RIVAS EMERGES AS FRONTRUNNER IN LEADERSHIP FIGHT

Assemblymember Robert Rivas (Democrat, Salinas) recently emerged as the frontrunner to eventually succeed Assemblymember Anthony Rendon) Democrat, Lakewood) as Speaker of the Assembly. Following an announcement by Rivas that he had secured the votes needed to unseat the speaker, political antics ensued within the Democrat caucus. The two made a joint announcement that Speaker Rendon would remain as Speaker for the rest of the legislative session. Assemblymember Rendon is termed out in 2024.  An interesting article written by long-time veteran columnist Dan Walters detailing the antics can be read at: 

https://calmatters.org/commentary/2022/06/democratic-factions-vie-for-power-in-assembly/

Chris Wysocki is WMA’s State Legislative Advocate. He can be reached at chris@wma.org.