SR-11-10-2015-7D 502-001-03
City Council
Report
City Council Regular Meeting: November 10, 2015
Agenda Item: 7.D
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To: Mayor and City Council
From: Martin Pastucha, Director, Public Works, Water Resources
Subject: Introduction for First Reading of an Ordinance Amending Santa Monica
Municipal Code Section 7.12.150 Which Requires Individual Water Meters for
Each Residential Unit in New Multi-family Residential projects; and Adopt a
Resolution Establishing Reduced Water Rate Discounts for MFR Units in
100% Affordable Housing Projects.
Recommended Action
Staff recommends that the City Council:
(1) Introduce for first reading the attached ordinance (attachment A) amending
Santa Monica Municipal Code Section 7.12.150 which requires individual water
meters for each residential unit in new multi-family residential projects. The
proposed amendment would provide that individual meters be required for all
residential projects with six residential units or fewer, and require a City master
meter and private submeters for all multi-family residential (MFR) projects with more
than six residential units. In addition, the proposed amendment would remove the
existing exemption for affordable housing projects.
(2) Adopt the attached resolution (attachment B) establishing a reduced water
rate discount for MFR units in 100% affordable housing projects.
(3) Authorize the budget changes as outlined in the Financial Impacts and
Budget Actions section of this report.
Executive Summary
Existing code which has been in effect since 1990 requires individual water meters for
each unit of new MFR construction. Practical limitations exist in attempting to place
more than six meters at a new MFR project, given the space restrictions in alleys and
street parkways. The existing code contains an exemption to this requirement for
affordable housing projects. Given the water conservation benefits of individual
metering, via submetering, for all residential units including low income units, this report
recommends amending SMMC Section 7.12.150 to clarify that MFR projects with more
than six units be required to install a City master meter with private submeters, and that
the exemption for affordable housing projects be removed. To offset the cost impacts
of eliminating the exemption from separate metering for affordable housing projects,
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staff recommends reduced water rates for MFR units in 100% dedicated affordable
housing projects.
Background
SMMC Section 7.12.150 requires individual water meters for each unit of new multi -
family residential construction. It includes an exemption for affordable housing projects,
allowing the developer to provide a single master meter for the project if an acceptable
alternative method for determining water consumption for each unit is provided.
Although the staff report introducing Ordinance No. 1513 (CCS) at the February 13,
1990 (attachment C) Council meeting addressed the issue from the perspective of
construction costs, the prevailing consideration at the time was a prolonged drought
affecting California from 1987–1992. It was assumed that individual metering would
enable residents and the City to monitor water consumption and reinforce water
conservation measures in place at the time.
However, as a practical and legal matter, implementation of the requirement is a
challenge for many multi-family residential developments. To allow for periodic reading
and maintenance, SMMC Section 7.12.140 (e) requires that water meters be placed
within the public right-of-way on the street side of the development or in an alley behind
the project. The frontage area of many properties along the street often is not large
enough to accommodate multiple meters, and alleys behind many properties similarly
present space constraints due to their narrow width and conflicts with other utility
services in the alley. As a practical matter, the two code sections conflict. Multi -family
projects incorporating more than six units require significant space for meters which is
often not available because of placement of parkway trees, refuse enclosures, or
parking areas among other things. Consequently, projects other than affordable
housing developments have installed master meters rather than individual meters, with
the condition that submeters be installed as a means of monitoring individual water
consumption and continuing the focus on water conservation. This requirement is
enforced by Public Works staff in Water Resources as a condition of development or
during plan check by staff in the Civil Engineering Division.
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Submeters are individual meters behind the master meter. These meters are installed
on each water line servicing the individual units, allowing the monitoring of water
consumption for each unit. Whereas the master meter is City-owned and maintained,
submeters are owned, operated, and maintained by the landlord, property management
firm, condominium association, or homeowners association. A representative listing of
multi-family residential projects, which have been required to install submeters in recent
years, is included in attachment D. For illustrative purposes, attachment E is a
photograph of a submeter installation for an 8-unit project at 1837 12th Street.
Also, plumbing systems in new multi-family construction utilize central water heaters for
the entire building, thereby providing energy savings for the building as opposed to
having multiple water heaters. As a result, each unit is supplied with separate cold and
hot water service lines. In some cases developers have installed dual submeters in
individual units, but the technology for hot water meters is relatively new. Therefore, the
more common practice has been to provide cold water meters only for individual units.
As an alternate methodology to submeters, some landlords in multi-family
developments in Santa Monica have utilized the Ratio Utility Billing System, or RUBS.
In the RUBS approach, water consumption is allocated to each tenant through an
allocation formula, which can include one or a combination of the following factors:
Number of occupants
Square footage
Number of bathrooms or bedrooms
Number of water fixtures
Over the years, staff has received complaints from some tenants about use of RUBS.
Some tenants have claimed RUBS methodology is unfair because it does not reflect
their actual usage. Others have complained that it does not comply with the code
requirement for individual meters.
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Discussion
A conflict exists between the existing requirement to place water meters in the public
right-of-way and the requirement for individual water meters for most multi-family
residential unit. The placement of meters in the public right -of-way is necessary to
avoid potential exposure in the event of leaks at the meter or other failure in the service
line on private property. Additionally, meter maintenance and meter reading is facilitated
in having access to the facilities without having to enter private property and the
associated liability. As a result, practically speaking, changing SMMC Section 7.12.140
(e) (the requirement to place meters in the public right-of-way) is not recommended.
Proposed amendment to 7.12.150 related to water meter requirements for new multi-
family residential construction
Given the practical impediments and physical limitations, which make it infeasible to
require the installation of a separate City-owned water meter for each unit of a new
multi-family development, staff recommends a revision to SMMC Section 7.12.150 to
require individual meters for all new multi-family developments with six or fewer units,
and require a master meter and individual unit submeters for new multi-family
developments with greater than six units, and repealing th e affordable housing
exemption. The benefits of the revision include:
Clarification of the requirements for individual meters for each residential unit by
establishing a clear threshold of the number of units in a project above which a
master meter (owned and maintained by the City) is required in the public right of
way in combination with submeters on property (owned/maintained/monitored by
the property owner);
Fewer public meters in the public right of way, resulting in less conflicts with
parking areas, street trees, refuse enclosures, and other utilities,
Reduced cost to the city for installation, maintenance, and billing resulting from
fewer public meters;
Enhanced conservation opportunities in providing a means to measure individual
water consumption in all residential units, including those in affordable housing
projects.
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Water conservation continues to be a key element in the City’s water management
strategy. California has experienced drought in 1987-1992, 2000-2002, and 2007-2009.
Given the current drought conditions (2011 to present year) and the City’s stated goal of
achieving water self-sufficiency by the year 2020, meeting water conservation goals is
an integral component of demand management strategies, which when coupled with
supply augmentation opportunities, will assist the City in achieving its water
conservation goals.
Prior to and following the adoption of Ordinance No. 1513 (CCS) in 1990, the City
adopted and amended numerous water conservation ordinances and initiatives,
including SMMC Chapter 7.16, Water Conservation, which addresses:
Establishment of Water Conservation Plans and Water Shortage Response
Plans;
No-Water Waste requirements addressing time of day landscape irrigation
restrictions, and prohibiting irrigation overspray and runoff;
Establishment of a water demand mitigation fee to mitigate the estimated daily
water consumption rate projected for the development.
Additionally, SMMC Chapter 7.18, Water Conservation Plumbing Standards, was
adopted in 1993 to require all plumbing fixtures in a structure to be retrofitted with water
conserving fixtures upon sale or transfer of the structure.
The City’s Office of Sustainability and the Environment (OSE) manages the City-wide
Sustainability Program, including several community-focused water conservation
programs:
Administration of the City’s Water Shortage Response Plan;
Community based water education programs with outreach to local schools;
Landscape and gardening water efficiency assistance;
Water waste ordinance enforcement;
Administering community rebate and grant programs for water efficient
appliances and irrigation systems, and purchase and installation of rain barrels
and cisterns.
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Currently, drought conditions in the period 2011–present have resulted in Council‘s
adoption of Stage 2 water shortage conditions on August 12, 2014 (attachment F) and
development of a water allocation plan through amendments to the City’s Water
Shortage Response Plan at the January 13, 2015 (attachment G) Council meeting.
Continuation of the conservation strategies and public outreach will be necessary to
achieve conservation goals. Recent development of more water efficient indoor fixtures
and appliances has created opportunities for enhanced indoor water efficiencies.
Additional water savings can be achieved through enhancements in outdoor water
efficiency. Nevertheless, the requirement for water use accountability in all individual
residential units (single and multi-family) remains a highly effective way to maintain
residential water efficiency.
Proposed water rates discount for multi-family residential units in 100% affordable
housing projects
SMMC Section 7.12.150 includes an exemption for affordable housing developments,
presumably to encourage such projects by reducing construction costs. The exemption
was conditioned upon providing an acceptable alternative method for determining water
consumption for each unit. Since the majority of new affordable housing projects will
likely be larger than six units and the conservation incentive and accountability goals
are the same for affordable units as for market rate units, the exemption for affordable
housing projects in the original ordinance is inconsistent with City conservation goals.
If the exemption for low income multi-family residential projects is removed, thereby
requiring these projects to include plumbing for submeters, construction costs would
see an increase of up to $1,000 per residential unit. This estimate was provided by
Community Corporation representatives. As a potential offset to this cost increase, staff
recommends reduced water rates for multi-family residential units in 100% affordable
housing projects. Similar to the low-income program currently provided for single-family
customers, the discount would be $1 per HCF of water in the first tier for each unit in an
affordable housing project.
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In the current rate structure, multi-family customers receive 4 HCF of water in the first
tier for each residential unit. Accordingly, the maximum discount provided would be $4
per residential unit per billing period. For example, a 20 unit low income project would
receive up to an $80 discount in a single billing period.
The proposed low income discount, if approved by Council, would apply to all units in
100% affordable housing projects only. It is also important to note that whereas the
submeter requirement would apply only to new MFR projects, the proposed low income
discount would be applied to all residential units in 100% affordable housing projects
including those projects already built. There currently are approximately 3,500 low
income MFR units throughout the city. The availability of the discount to existing low
income units presented a more acceptable cost offset to Community Corporation over
the increase in project construction costs and the discount being applied only to new
projects.
Regional comparison cities were surveyed to inquire about a similar program to provide
financial relief for multifamily residential customers. Low income multi-family water
discounts are not provided in Burbank, Glendale, Los Angeles, Long Beach, or
Pasadena (Los Angeles and Pasadena provide single -family low income customer
discounts similar to the Santa Monica single-family low income program). Similarly,
staff surveyed the cities of San Francisco, Sacramento, and San Jose and found no
existing program in those cities which provided low income water pricing for multi -family
residential customers.
The same comparison cities were also surveyed to inquire about their local requirement
for submeters in multifamily residential projects. Although not widely implemented
among the cities, Pasadena and Beverly Hills have existing regulations similar to the
individual meter ordinance proposed for Santa Monica.
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Agency Multi-Family Low
Income Water Discount
Submeters required by Code or Ordinance
Burbank None None
Glendale None None
Los Angeles None Optional, not required
Long Beach None None
Pasadena None Master meter/submeters for new MFR
projects
Beverly Hills None Master meter/submeters for new projects
greater than 3 units
Sacramento None None
San Francisco None None
San Jose None None
At the state level, Senator Lois Wolk, 3rd District, has introduced SB-7 for the 2015-2016
legislative session, Water Submeters in Multi-Residence Structures. The proposed bill
authorizes the Department of Housing & Community Development to develop and
propose standards requiring the installation of water submeters in new multi-unit
residential rental buildings. Staff will monitor the progress of this legislation.
Cost of service requirements in Proposition 218 require that the discount provided to
qualified low income customers be covered by the City’s General Fund in order to avoid
it becoming subsidized by other rate payers. The projected General Fund transfer to
the Water Fund is estimated at approximately $84,000 per year (3,500 units x
$4/unit/billing period x 6 billing periods/year). Additional low income units added in any
given year would increase the general fund transf er amount by $24 per MFR unit per
year ($4/unit/ billing period x 6 billing periods/year).
Financial Impacts & Budget Actions
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The projected discount to qualifying low income MFR projects is approximately $84,000
in the first year. The following budget action would be required to reimburse the Water
Fund:
1. Appropriation of budgets in the amount of $84,000 for transfers from the General
Fund (01695.570081) to the Water Fund (25695.570081).
Prepared By: Gil Borboa, Water Resources Manager
Approved
Forwarded to Council
Attachments:
A. Ordinance
B. Resolution
C. February 13, 1990 Staff Report (weblink)
D. Recent Submetered Multi-Family Residential Projects
E. Submeter Installation for an 8-unit Project
F. August 12, 2014 Staff Report (weblink)
G. January 13, 2015 Staff Report (weblink)
Attachment A – Recent Submetered Multi-Family Residential Projects:
2602 Broadway, 4 story, 33 units, 2012
626 Broadway, 4 story, 48 units, 2009
1610 Broadway, 3 story, 7 units, 2009
1906 Broadway, 4 story, 32 units, 2008
606 Broadway, 6 story, 100 units, 2008
819 Broadway, 4 story, 97 units, 2011
1502 Broadway, 4 story, 33 units, 2012
1753 18th Street, 18 units, 2014
1754 19th Street, 7 units, 2014
214 Santa Monica Blvd., 3 story, 38 units, 2013
3107 Santa Monica Blvd.,2 story, 9 units, 2009
519 Santa Monica Blvd., 5 story, 2012
212 Marine Street, 4 story, 2006
395 Santa Monica Pl., all retail stores submetered, 2010
519 Santa Monica Blvd., 5 story mixed use, 2012
1317 17th Street, 5 story MFR mixed use, 2015
702 Arizona Ave., 4 story mixed use, 2009
507 Wilshire Blvd., 5 story, 50 units, 2009
Attachment B – Submeter Installation at 1837 12th Street
Reference:
Resolution No. 10923
(CCS)