• Governor signs water submetering bill
  – useless to small owners, and worse yet
   
• SPOA policy impact statement on Water Submetering bill
   
• The new law – with important parts highlighted
   

Water submetering bill passes

Useless for small owners

Worse yet:

   just-cause eviction

      & back-door rent control 

On December 16, Governor Mitt Romney signed the Water Submet-ering bill into law, over the strenuous objections of SPOA, which was excluded from drafting the bill. Backing the bill, however, were the Greater Boston Real Estate Board (GBREB) and the Massachusetts Rental Housing Association (MRHA). The new rules make water submetering impossible for most small owners and impose just-cause eviction and back-door rent control. Perhaps it’s no surprise, because the closed-door negotiations included only legal services lawyers and GBREB, which represents large landlords and developers, who can submeter at no cost in new construction.

Start-up costs & delays

Water submetering companies from other states testified that submetering is financially feasible only by doing 50 units or more at once. Under the new rules, owners can send bills to tenants for their water usage only after replumbing and separating out all the water pipes going to each apartment, installing certified submeters to measure only the water delivered to each apartment, and installing a radio-computer device to send the submeter measurements to a hired water billing company which will send out the bills and charge the owner. Then the owner must replace all toilets, faucets and showerheads with new, water-saving fixtures, certified by a plumber. After all these costs, owners must wait for current tenants to vacate voluntarily before starting to bill new tenants only. Almost no owner is going to do it!

Conservation hypocrisy

There is a no-cost billing method that would conserve water, would be widely adopted and would not push rents up. A building’s total water bill can be allocated proportionately to each apartment using simple arithmetic. It’s done in many states. But legal services lawyers vehemently opposed it and GBREB did not have the clout to stop them. They all were sucked up by a study showing that submetering conserves more water than proportional allocation per building. Conservation groups and SPOA were not at the negotiating table to push a key point: if almost no one does submetering (at least in existing buildings) and most would do allocation, then only the allocation method would achieve any conservation at all. For all of Massachusetts’ environmentalism, only one conservation group was arm-twisted to endorse this bill at the end. 

Tenant lawyers also seized on alleged “unfairness” if tenants were  billed for estimated instead of actual water usage and claimed owners would not reduce rents after shifting water bills to tenants. These bogus arguments were swallowed. Water is already included in rents in a “guesstimated” way (as well as tenant use of rooms, hallways, roofs, basements, etc.). And pressure on rents to rise would definitely be less if owners don’t pay water bills and don’t have high start-up costs.

Just-cause eviction  & back-door rent control

But the worst part of this new law is that, again under pressure from tenant lawyers, owners are barred from ever starting water billing with any existing tenants. They also cannot raise the rent in order to pass on any start-up costs – ever.  To enforce these rules, the new law imposes just-cause eviction and back-door rent control on all existing tenants right now!

Just-cause eviction in Massachusetts came and went with rent control, and now it comes back. It means the owner must prove to the court that he or she is not evicting the tenant except for specific, provable, good reasons and not in order to start billing tenants for water. Back-door rent control comes in because the new law specifically says no tenants can ever be charged for the start-up or billing costs, not even under a “new tenancy.”

Thus, ANY rent increase can be challenged, and the owner must then show the court every expense justifying a rent increase, exactly like the “grievance” type of rent control just defeated in Boston. How do you prove you are NOT raising the rent to cover start-up costs? Here, then, is yet a further deterrent to all existing owners to submeter. And coming weaseling back into our laws is just-cause eviction and de facto rent control in unpredictable ways. No owners can now safely raise the rent or use a 30-day notice to quit for any reason without a tenant possibly raising an intention to submeter as a defense and delaying tactic. A precious chunk of Question 9 was given away.

SPOA stonewalled

SPOA understood all these problems and outlined them carefully to legislators. We did an intensive phone call campaign and stopped the bill for four months. GBREB, nevertheless, pressured behind the scenes and the bill squeaked through.

This new law reflects the worst legislative outcome: higher costs on rental housing, bad rent control and eviction precedents introduced into law, while leaving present law effectively just as it is, with no conservation and almost all owners still paying water bills – all from closed-door backroom dealing.
 

We must at all costs avoid any similar outcome on a rent escrow bill. This is the clear danger we face ahead. We must present a strong-enough political force for a truly effective rent escrow law, or otherwise we will end up with “rent escrow” in name only – and the free rent trick that abuses small owners so badly will continue on largely unchanged.

NEGATIVE IMPACTS OF

Water Submetering Bill [H.5001]
if enacted into law
 

BRIEF SUMMARY:
 

Water submetering would transfer water bills from owners to tenants through proportional billing according to actual submetered water usage.

Water conservation among the tenant population could reach 25% to 30% reduction in water usage – and save taxpayers the huge costs of new water and sewage treatment plants in the future – but only if water submetering is widely implemented in the tenant population.

Two critical requirements in H.5001 – high initial start-up costs and delayed billing of tenants – make submetering nearly impossible to implement in existing rental housing, and the conservation impact of submetering in new construction is miniscule.

Less that 10% of existing and older properties could implement water submetering under H.5001’s restrictions, based on consensus among rental property owners of these properties.

If only 10% of the tenant population achieves a 30% water usage reduction, the net water conservation in the total tenant population is just 3%.  BY CONTRAST, if 75% of the tenant population achieves the same 30% water usage reduction, the net water conservation in the total tenant population would be 22.5%, dramatically higher.

To achieve any significant water conservation, H.5001 needs to be AMENDED so that water submetering is implemented widely in the tenant population, to at least 75% of all tenants and as far down the “housing ladder” as possible. [See next page: Amendments]

Small property owners were excluded from drafting negotiations on this bill, which largely explains its unworkability in so much existing rental housing.

H.5001 imposes minimal barriers to water submetering in new construction, but new construction adds less than 1% to total rental housing stock each year, yielding less than 0.3% incremental new water conservation each year – or 3% water conservation in new construction units only after 10 years of implementation.

EXTENDED SUMMARY:
 

§        CONSERVATION GOALS

Massachusetts is the only state that does not allow tenant water billing. Water submetering has the potential to cause water usage to drop 25% to 30% in the tenant population, the only segment in Massachusetts with no similar conservation incentive.

§        COST FACTORS in IMPLEMENTATION

COST/BENEFIT INCENTIVE:  Owners will only submeter if savings on their annual water bills – about $400 to $500 per unit – exceed their start-up and ongoing costs for submetering. Even if ongoing costs are recoverable from owners’ reduced water bills when tenant water billing becomes stabilized and well established, initial start-up costs and costs in the near future after start-up can disincentivize owners from submetering at all.

This Water Submetering bill (H.5001) imposes the following start-up, near-future and continuing costs on owners in order to submeter:

1) Submetering itself – Changing water lines and installing submeters for every unit – about $1,000 per unit – a minimum unavoidable cost, but substantial in all existing housing.

2) Modernization – Changing all faucets, showerheads and toilets in every unit – about $700 to $1,500 per unit or more. This modernization component is not required in any other state and creates the chief deterrent to water submetering in existing rental housing, and a greater deterrent as the age of the housing increases.

3) Administrative costs – Ongoing monthly charges from water billing companies, who administer the complex allocation of main bills to unit bills, cannot be passed on to tenants under this bill – and will eat up about 20% of total annual savings from owners’ water bills.

4) Delayed start of water billing – All start-up costs are incurred at once, but existing tenants cannot be billed for their water usage. The unit is not eligible for water billing until existing tenants leave “voluntarily” or are evicted “for cause,” creating a potentially long period before full tenant water billing is achieved to offset owner start-up costs.

5) Weak enforcement for bill collection – For unpaid water bills of about $30 to $40 a month, only very ineffective enforcement is available – either eviction (too expensive and confrontational) or deducting unpaid bills from security deposits (but many tenants leave by not paying the one month’s rent equivalent to the security deposit).

§        IMPACT on WATER CONSERVATION & ENVIRONMENT

Because of start-up cost barriers, delayed billing, and weak billing enforcement, most owners of existing rental housing, and virtually all owners of older housing and all small property owners, will not submeter under the present provisions of H.5001. Less than 10% of the tenant population will be submetered, and at an estimated 30% drop in water usage after submetering, the net water conservation among the total tenant population would be under 3%. To achieve any significant water conservation, this bill needs to be amended to remove cost barriers, so that water submetering penetrates to at least 75% of the tenant population.

§        IMPACT on STATE & MUNICIPAL EXPENDITURES

The chief goal of water conservation is to reduce demand for the increasing high cost of water and sewage infrastructure. This bill would produce little conservation, and state and municipal expenditures for water/sewage infrastructure will continue to rise in the future.

§        IMPACT on STATE & LOCAL TAX REVENUE

The two controversial provisions in this bill – modernization costs not required in any other state and delayed start of water billing to existing tenants – both reduce property tax values and reduce state income tax revenues from owners who cannot recover costs.

§        IMPACT on RENTS & TENANT COSTS

The cost of water submetering to achieve conservation must ultimately be borne by tenants, both in water bills and potential rent increases if submetering costs are too high. Because of its high-cost start-up requirements, this bill will EITHER effectively limit or deter water submetering in existing rental housing and thus have little impact on rents OR will place a very strong pressure on owners to raise rents to cover start-up costs if they do submeter. To the extent water submetering can be expanded to more rental housing stock by amendments to this bill, the goal should be to keep owners’ costs as low as possible, which will keep pressure on rents as low as possible.

§        IMPACT on HOUSING STOCK

The modernization requirement in H.5001 is a throw-away cost since it is done in isolation and not linked to more extensive modernization of kitchens and bathrooms. As a throw-away cost, it would divert owners from priorities for other modernization needs of older housing that ensure long-term preservation of the housing and increased property values in neighborhoods.

§        IMPACT on LANDLORD/TENANT LAW & LITIGATION

The complex method that this bill “grandfathers” all existing tenants until they leave “voluntarily” or are evicted “for cause” will lead inevitably to lengthy eviction trials, which will impose financial and administrative burdens on the courts as well as owners. The “just cause” eviction precedent in this bill is regressive for landlord/tenant law – going back to the days of rent control.

§        SUGGESTED AMENDMENTS to ENCOURAGE SUBMETERING

1) Eliminate the modernization component, which is not required in any other state. This is the single most costly deterrent to implementing submetering. OPTION: Texas (the only state with any requirement to alter water-using fixtures) only requires that older 5-gallon toilets be brought down to a 3.5-gallon flush with simple devices inserted by hand into the toilet tank.

2) Remove the “grandfathering” and “just cause” eviction provisions for existing tenants. OPTIONS: Require a six-month notice before existing tenants can be billed for water. Require a one-year notice before elderly, disabled, and low-income existing tenants can be billed for water. This would ensure a predictable recovery time on owner start-up costs to encourage submetering.

3) Include option of proportional or “RUBS” billing, which allocates water bills proportionally to units by any specified measure, such as number of water-using fixtures or square footage of apartment. This very low-cost water billing system was “off the table” from the start in negotiations on H.5001, so it is controversial for tenant advocates. Mixed research data suggest modest water conservation or possibly none, but the billing system would heighten tenant awareness broadly and prepare them for eventual submetering.

4) Amend the building code to require submetering when substantial renovation takes place on kitchens and bathrooms. Submetering would be the least costly at the point of substantial renovation of the kitchen and bathroom in any given unit. By requiring submetering at this point in the code, owners do not unwisely overlook it and then face substantial costs later to retro-fit submetering.
 

DETAILED ANAYSIS 

CONSERVATION GOALS

Massachusetts is the only state that does not allow submetering or other methods of billing tenants for water usage.

Evidence from other states shows that water usage drops about 25% to 30% when tenants are billed for water usage – in the same way they pay other utilities (electricity, gas, oil).

Residential tenants in Massachusetts are the last remaining block of the state’s residential, commercial and industrial population that has no incentive to conserve water. Owners currently MUST supply water to tenants and pay for it. Water costs are therefore included (and hidden) in rents.

COST FACTORS in IMPLEMENTATION

The only incentive for owners to implement submetering arises in the savings of $400 to $500 a year per unit in owner-paid water bills that would be transferred to tenants in $30-to-$40-a-month tenant-paid water bills (assuming no reduction in total revenues to municipal water companies). If submetering costs exceed these savings, owners will not submeter.

This bill imposes the following cost (or loss) factors, whose combined impact will inhibit or effectively stop water submetering by most owners of existing rental properties – probably 90% or more of them, especially owners of older properties and small property owners. For new rental housing construction, these costs factors, in contrast, would be minimal.

1.Submetering costs   This bill requires certified submeters measuring only the water usage in each individual unit. These unavoidable costs of submetering involve changing old water lines, installing submeters to each unit or multiple point-of-use submeters in each unit, and installing a radio-transmitter device in every building which transmits submeter readings to a billing company.  These start-up costs alone – roughly $1,000 per unit – would likely deter submetering by a significant portion of (usually small) owners of existing rental housing.

2. Modernization costs   In addition to submetering costs, however, this bill also requires full modernization of every water-using fixture prior to billing tenants – in other words, replacing every faucet (kitchen and bathroom sinks), showerhead, and toilet in every unit. This modernization requirement would cost from $700 to $1,500 and possibly more per unit. For all older, less modernized buildings (typically owned by small owners), these costs become larger and larger – and compete against other modernization needs of older buildings. All 49 other states allow submetering, and NOT ONE STATE requires this modernization component. Texas only requires a 3.5-gallon flush by installing simple devices (e.g., hand-installed water dams in the toilet tank) in existing 5-gallon-flush toilets. Moreover, modernization of water-using fixtures is already required by building codes and dictated by available products when owners undertake general remodeling of kitchens and bathrooms. Thus, this bill’s costly modernization requirement, tied to water submetering, would be unique to Massachusetts and presents THE MAJOR DETERRENT to submetering under this bill.

Furthermore, the evidence from other states of a 25%-to-30% reduction in water usage when tenants are submetered is based on submetering WITHOUT modernization. No evidence exists to show that modernization in conjunction with submetering affects water conservation by tenants.

3. Administrative costs   Owners will incur several administrative costs: (1) the initial search for a professional installer and billing company, (2) the signing of detailed written agreements with tenants (most difficult with semi-literate minority owners and in oral tenancies-at-will), and most importantly, (3) the ongoing cost of monthly water billing done by specialized billing companies, which cannot be passed on to tenants. This last cost will cut into about 20% of the annual savings in water bills.

4. Delayed start of tenant water billing   Practical and economic reasons dictate a one-time installation effort to submeter ALL units in a building at once, a high-cost start-up to submeter. This bill allows this installation to occur in the units of existing tenants, but strictly forbids any water billing to these same existing tenants. Existing tenants are “grandfathered” until they either leave voluntarily or are evicted “for cause,” which could be for months or years or decades, at which point the unit becomes eligible for water billing to new tenants. Thus, submetering and modernization costs must be incurred for an entire building, but cost recovery through tenant water billing cannot start except very partially, nor expand to the whole building except gradually as existing tenants move out, a highly unpredictable payback to the owner for the original investment. This unpredictable delay in billing that would recover start-up costs creates yet a further deterrent to submetering.

5. Weak enforcement in collecting water bills   In this bill, if tenants do not pay water bills, the owner’s only recourses are to evict the tenant or to deduct the unpaid bills from the security deposit, if a security deposit was collected. Eviction for unpaid bills of $30 to $40 a month, even as they accumulate, is not cost effective (court costs plus attorneys’ fees) and could risk escalating into a major legal battle between owner and tenants. Deducting unpaid bills from the security deposit has an upward limit, and each deduction reduces the effectiveness of the security deposit for its original purposes. Many owners do not collect security deposits because of the inherent legal risks under the Security Deposit Law. Many tenants defeat the security deposit by simply not paying the last two or three month’s rent – when owners have no time to evict. These weak enforcement factors create uncertainty in collecting water bills, which would deter submetering or cause some percentage of hapless owners to operate submetering at a loss.

6. Cost-effective strategies of marketing to older, small-scale housing so typical throughout Massachusetts’ housing stock will be difficult or impossible to develop. Water billing companies that already exist in other states focus almost exclusively on new construction and larger, newer buildings and have little experience with older buildings. Thus, water conservation in older rental housing and in rental housing owned by small owners will not be achieved in great part because of this bill’s high initial start-up costs and requirements.

IMPACT on WATER CONSERVATION & ENVIRONMENT

Because of the costs outlined above, this bill offers few financial incentives and substantial financial deterrents to water submetering. Accordingly, this bill will fail to deliver its primary intended goal – water conservation through submetering. The goal fails in most existing rental housing.

The consensus among small property owner groups throughout the state is that less than 10% of smaller property owners would undertake submetering under the conditions imposed by this bill. Larger owners of older buildings would also have a low rate of submetering. Thus, net water conservation will be severely restricted unless submetering is expanded to a larger portion of the tenant population, as the following table shows.
 

*This is the highest estimate of tenant water conservation under submetering
 

In new rental housing construction, the cost factors of submetering are negligible. Modernization is included in construction costs, and tenant billing begins at once in all units. Water submetering will be universal in new construction. But new construction proceeds only very slowly, and adds less than 1% a year to the Commonwealth’s total rental housing stock. The net conservation among the total tenant population that is contributed solely by tenants in newly constructed units starts at zero, grows very slowly and adds very little to overall water conservation among tenants.

To achieve any significant water conservation, the deterrent cost factors in this bill must be reduced so that submetering in existing rental housing occurs more widely and further down the “housing ladder.”

Sewage treatment costs are included in water bills and explicitly included under this bill. Without water conservation, the current pressures on existing sewage treatment facilities remains, and existing environmental pollution from sewage would continue unabated.

IMPACT on STATE & MUNICIPAL EXPENDITURES

The public benefit of water conservation is to reduce the demand for new infrastructure, that is, for construction of water purification plants and sewage treatment plants, which must be funded out of state and municipal tax revenues. By reducing demand over time or holding it constant, pressures on existing water/sewage facilities are reduced, older facilities can be maintained longer, and the need to build new water/sewage facilities at considerable cost to taxpayers can be held at bay or at least postponed much longer. Successful water submetering leading to significant water conservation would significantly reduce future expenditures out of state and municipal treasuries for new infrastructure – but expenditure reduction will not happen under the present Water Submetering bill. 

IMPACT on STATE & LOCAL TAX REVENUES

If submetering is effectively blocked in most rental housing by the deterrent aspects of this bill, there is no impact on state or local tax revenues, but there is also no benefit on reducing future state and local expenditures on water/sewage infrastructure. If submetering does occur, and to the extent it does occur under this bill, the impact on state and local tax revenues would be as follows for each of the bill’s separate provisions:

1) Submetering costs (alone, without modernization costs) would marginally improve the property tax values of submetered properties, but would reduce state income tax revenues from rental property owners to the extent submetering costs cannot be recovered in higher rents and are deducted from gross rental income.

2) Modernization costs, done in conjunction with submetering only and not as part of any other concurrent modernization, would have zero impact on property tax values. New faucets, showerheads and toilets by themselves have no improvement value except in the context of extensive renovation of kitchens and bathrooms – and this bill only encompasses modernization in conjunction with submetering. Modernization costs would reduce state income tax revenues from rental property owners to the extent these modernization costs cannot be recovered in higher rents and are deducted from gross rental income.

3) Delayed start of tenant water billing reduces property tax values and reduces state income tax revenues from owners until all tenants are paying water bills, unless owners can recover unpaid tenant bills in higher rents.

4) Administrative costs, which this bill explicitly prohibits being charged to tenants, reduces property tax values and reduces state income tax revenues from owners to the extent owners cannot recover costs in higher rents.

The extent to which owners can recover the above water submetering costs in higher rents is limited to “what the market will bear,” a difficult calculation to make. Those expenses that are most difficult to recover in higher rents should be eliminated: modernization costs and delayed start of water billing.

IMPACT on RENTS & TENANT COSTS

The Boston Tenant Coalition opposes this bill because they fear it will raise rents. This fear is not ungrounded if owners actually do submeter. By “rents” they presumably mean at least the transferred new water bills that tenants must pay, and their well-founded suspicion that owners will not reduce current rents when water costs are transferred. Start-up costs, as indicated above, will more than eat up owners’ savings on water bills, and owners will not likely reduce rents, unless competitive forces require it. Tenants will therefore incur at least an additional “rent” of about $30 to $40 a month in new water bills, though they will have the opportunity to conserve and reduce their water bills.

Will owners INCREASE rents at the same time that water bills are transferred or submetering is installed? The answer is “yes” (but limited to the extent “the market will bear”). Depending on actual costs and perceived rates of return, or actual payments on loans taken out to submeter, owners would attempt to raise rents on submetered tenants – on top of water bills. Much more certain rent increases would occur for those existing tenants who cannot be billed, so that owners could recover their start-up costs. This Water Submetering bill does not prevent rent increases on existing tenants (that would be rent control). The “grandfathering” of existing tenants is therefore pointless and counterproductive.

Ultimately, the cost of conversion to water submetering to achieve water conservation must be borne by tenants; owners won’t do it for free. To keep rents as low as possible, the goal should be to make water submetering as easy and cheap as possible, which this bill does not do.

IMPACT on HOUSING STOCK

If this bill is not amended and effectively prevents almost any water submetering in existing rental housing, there will be no impact on the existing housing stock. The bill allows submetering in new construction, but as noted above, this segment of the housing stock in miniscule and grows slowly.

If the bill is changed in part to increase incentives to submeter, various features of the present bill – if still retained in the bill – would have the following specific negative impacts whenever water submetering is implemented:

      1) The modernization component of this bill, if retained, could shift owner priorities to the detriment of long-term housing preservation and increased property values.  Water submetering with the modernization component could derail or delay more important improvements needed in older buildings that could ensure long-term preservation of our most economical lower-rent housing – improvements such as new electrical and heating systems, new roofs, replacement of rotting porches, etc.

      2) The delayed start of water billing has the same effect modernization costs on shifting owner priorities to the detriment of long-term housing preservation.

      3) Any litigation that results from this complicated bill (for example, tenants who fight eviction with the “just cause” provision in this bill or tenants who feel wrongly billed) would also rob owners’ financial resources to improve and preserve housing. Litigation risks always need to be reduced for the sake of the housing stock.

IMPACT on LANDLORD/TENANT LAW & LITIGATION

Significant litigation could result from the complex language and methodology used in this bill to “grandfather” all existing tenants until they leave “voluntarily” or are evicted “for cause.” These terms are inherently vague and subject to interpretation, which easily can lead to lengthy litigation during eviction trials. The potential for lengthy litigation becomes a deterrent to submetering if owners think about it or hear about it. The cost of this litigation not only burdens the courts further, but cuts deeply into owners’ financial resources, reduces services to other tenants and slows modernization and housing preservation. Through these effects, local neighborhoods are impacted negatively.

The “just cause” eviction language directly infringes on, and makes an exception to, existing owner rights to terminate tenancies with 30-day notice or at the end of a lease or under the termination provisions of a lease. Massachusetts had “just cause” eviction only in rent-controlled jurisdictions – just three cities – and it came and went with rent control. Thus, this feature of this bill is regressive for landlord/tenant law – regressing back to the days of rent control. If this provision becomes a precedent that widens under case law or in other statutes, it imposes significant new costs on rental property owners who must engage in lengthy eviction trials or, in avoiding such trials, must suffer the costs that unwanted and undesirable tenants cause in their housing. These costs, of course, always devolve onto other tenants in the immediate future, one way or another, whether in reduced maintenance or poorer living conditions.

SUGGESTED AMENDMENTS to ENCOURAGE SUBMETERING

1) Eliminate the modernization component that is not required in any other state. This is the single most costly deterrent to implementing submetering.

OPTION: Texas (the only state with any requirement to alter water-consuming fixtures) only requires that older 5-gallon toilets be brought down to a 3.5-gallon flush with simply devices inserted by hand into the toilet tank.

2) Remove the “grandfathering” and “just cause” eviction provisions for existing tenants.

OPTION: Require a six-month notice before existing tenants can be billed for water.

OPTION: Require a one-year notice before elderly, disabled, and low-income tenants can be billed for water.

These changes would ensure a predictable recovery time period on owner start-up costs to encourage submetering, yet would preserve a significant measure of protection for tenants, the same protection currently allowed in no-fault evictions.

3) Include option of proportional or “RUBS” billing, which allocates water bills proportionally to units by any specified measure, such as number of water-using fixtures or square footage of apartment. This very low-cost water billing system was “off the table” from the start in negotiations on H.5001, so it is controversial for tenant advocates. Mixed research data suggest modest water conservation or possibly none under RUBS billing systems, but at the same time the cost of implementation is minimal. Thus, the option of starting a RUBS billing system would allow widespread adoption of tenant water billing, probably modest water conservation, but heighten tenant awareness of water conservation broadly in the tenant population and prepare them for eventual submetering as properties become upgraded. This amendment could be a bargaining chip.

4) Require submetering whenever extensive modernization occurs, such as complete rehabilitation of both kitchen and bathroom. This amendment would change the building code to require submetering – or at least separation of water pipes – whenever a unit undergoes substantial modernization of kitchen and bathroom. This degree of modernization is precisely the point at which water submetering becomes the least costly, adding the least incremental amount to the cost of the same rehabilitation without submetering. The cost impact is minimized, yet owners are not allowed to go forward with an unwise rehabilitation that would later require extensive costs to retro-fit water submetering to a modernized unit.

The new law –
with critical parts
emphasized in boldface

Chapter 417 of the Acts of 2004
 

AN ACT AUTHORIZING
WATER SUBMETERING
IN RESIDENTIAL TENANCIES.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Subsection (4) of section 15B of chapter 186 of the General Laws, as appearing in the 2002 Official Edition, is hereby amended by striking out clause (i) and inserting in place thereof the following clause:-

(i) any unpaid rent or water charges which have not been validly withheld or deducted pursuant to any general or special law.

SECTION 2. Said chapter 186 is hereby further amended by adding the following section:- Section 22.

(a) For the purposes of this section the following words shall have the following meanings:-

"Common area", any portion of a building with more than 1 dwelling unit that is not incorporated within a dwelling unit.

"Customer service charge", a fixed amount charged by a city or town or water company for providing water to a building.

"Dwelling unit", any house or building, or portion thereof, that is occupied, designed to be occupied, or is rented, leased or hired out to be occupied, as a home or residence of one or more persons.

"Landlord", the owner, lessor or sublessor of a dwelling unit, the building of which it is a part, or the premises wherein a customer receives water service through metered measurement.

"Submetering", use of a meter by a landlord who receives water from a water company, which meter measures water supplied to a dwelling unit to enable the landlord to charge the tenant of the dwelling unit separately for water usage, or which meter measures water supplied to a common area.

"Water company", a company, as defined in section 1 of chapter 165 or a municipal utility or any other waterworks system owned, leased, maintained, operated, managed or controlled by any unit of local government under any general or special law, which company, utility or system supplies water to a landlord through metered measurement. Any landlord imposing charges on tenants or otherwise engaging in any activity permitted under this section shall not be deemed thereby to be functioning as a water company as defined herein or to be subject to any laws or regulations regulating any such company.

"Water conservation device", for all showers, shower stalls, shower compartments or shower baths, a low-flow showerhead which shall have a maximum flow rate not exceeding 2 1/2 gallons of water per minute, for all faucets a maximum flow rate not exceeding 2 and 2/10 gallons of water per minute and for all water closets, ultra-low-flush water closets not exceeding 1 and 6/10 gallons of water per flush, contained within a dwelling unit.

(b) A landlord may cause to be installed by a plumber licensed in the commonwealth, at the expense of such landlord, submetering equipment in the landlord's building to measure the quantity of water provided for the exclusive use of each dwelling unit, provided that such equipment meets the standards of accuracy and testing of the American Water Works Association or a similar accredited association; and provided further, that a submeter is installed for each dwelling unit in the building and for the common areas of the building, so that all water used in a building is measured by both a primary meter and a submeter.

(c) A landlord may charge a tenant of a dwelling unit for water usage as measured through the use of submetering equipment only in accordance with this section and only upon the landlord certifying that the dwelling unit is in compliance with this section to a board of health, health department or other municipal agency or department charged with enforcement of the state sanitary code. All provisions of this section allowing landlords to charge tenants for water usage shall also be deemed to apply to sewer service charges calculated by means of the same primary meter or submeter. Certification by the landlord shall be provided under the penalties of perjury and shall include a statement that: 1) the dwelling unit is eligible for the imposition on the tenant of a charge for water usage in accordance with paragraph (d); 2) all showerheads, faucets, and water closets in the dwelling unit are water conservation devices and that all water closets were installed by a licensed plumber; and 3) the water submeter measuring the use of water in the dwelling unit was installed by a licensed plumber and is in compliance with the standards of accuracy and testing referenced in subsection (b).

(d) A dwelling unit shall become eligible for the imposition on the tenant of a charge for water usage only upon the commencement of a new tenancy in such dwelling unit and only if: (1) the dwelling unit is being occupied for the first time; or (2) the previous tenant vacated the dwelling unit voluntarily, or was evicted from the dwelling unit for nonpayment of rent or for breach of lease or noncompliance with a rental agreement for the dwelling unit; provided, however, that a dwelling unit shall not be deemed eligible for submetering if the new tenant relocated involuntarily from another dwelling unit in the same building or building complex; and provided further, that once a tenant of a dwelling unit has been charged for the use of water in accordance with this section, such dwelling unit shall remain eligible for the imposition of a charge for the use of water in all subsequent tenancies; and provided further, that a licensed plumber employed by or under contract with the landlord may perform any work in a dwelling unit as is required by this section to allow for the imposition on a tenant of a charge for the use of water, even if such unit is occupied by a tenant upon whom a charge for the use of water cannot be imposed.

(e) A landlord may not charge the tenant of a dwelling unit separately for water usage measured by a submeter, nor allow such tenant to be so charged, unless the submeter measures only water that is supplied for the exclusive use of the particular dwelling unit and only to an area within the exclusive possession and control of the tenant of such dwelling unit and does not measure any water usage for any portion of the common areas or by any other party or dwelling unit; provided further, that a landlord shall not charge such tenant for water supplied through a submeter to the dwelling unit prior to the landlord installing fully functional water conservation devices for all faucets, showerheads and water closets in the dwelling unit; and provided further, that the landlord shall ensure that such water conservation devices are installed and functioning properly at the commencement of each subsequent tenancy in such dwelling unit.

(f) A landlord may not charge the tenant separately, nor allow tenant to be charged separately, for submetered water usage unless the tenant has signed a written rental agreement that clearly and conspicuously provides for such separate charge and that fully discloses in plain language the details of the water submetering and billing arrangement between the landlord and the tenant. Each bill for submetered water usage shall clearly set forth all charges and all other relevant information, including, but not limited to, the current and immediately preceding submeter readings and the date of each such reading, the amount of water consumed since the last reading, the charge per unit of water, the total charge and the payment due date. Such charges shall be billed to the tenant in at leased as many periods as the landlord is billed by the water company providing such water to the building or such payments may be made on a monthly payment schedule as agreed to in the written rental agreement; provided, however, that if the landlord bills the tenant on a monthly basis, payment of the bill by the tenant shall be due 15 days after the date the bill is mailed to the tenant, but if the landlord bills the tenant at intervals greater than 1 month, payment of the bill by the tenant shall be due 30 days after the date the bill is mailed to the tenant. If the tenant fails to make such payment, such nonpayment shall be a material breach of the written rental agreement. Violation of such breach may be cured by payment of the water charges in full prior to any court hearing to adjudicate such violation.

(g) A landlord shall determine a calculated cost per unit of water consumption by dividing the total amount of any bill or invoice provided to the landlord from the water company for water usage, the customer service charge and taxes, but not including any interest for the late payment, penalty fees or other discretionary assessments or charges, for all water provided to the premises through the water company meter in that billing period, by the total amount of water consumption for the entire premises. The total amount charged separately to each submetered dwelling unit for water usage for any billing period shall not exceed such calculated cost per unit of water multiplied by the number of units of water delivered exclusively to the particular dwelling unit for the same billing period, provided that the landlord has verified that the total amounts of water usage measured by all submeters in the building, including all submeters for common areas, does not exceed the total amount of water usage in the building for the same billing period as shown on such bill or invoice.

(h) Whenever a tenancy in a dwelling unit commences after the beginning, but before the end, of a billing period for which the landlord has not been billed by the water company, the landlord shall mail to the tenant on the first day of such tenancy the reading on the submeter for the dwelling unit as of that day. The landlord may thereafter bill the tenant only for the water measured on the submeter subsequent to such reading.

(i) Whenever a tenancy in a dwelling unit terminates after the beginning, but before the end, of a billing period for which the landlord has not been billed by the water company, the landlord shall give to the tenant on the last day of such tenancy the reading on the submeter for the dwelling unit as of that day together with a final bill for water usage in the dwelling unit since the last prior reading of the submeter for such dwelling unit. The landlord shall charge the same rate for the water used by the tenant as the water company charged in the last bill issued to the landlord. Notwithstanding paragraph (f), the bill shall be immediately due and payable by the tenant. If the tenant does not pay the bill, the landlord may deduct the amount of the bill from any security deposit paid by the tenant in accordance with section 15B of chapter 186, prior to returning the balance of the security deposit, if any, to the tenant. If the landlord is not able to give the final reading on the submeter for the dwelling unit together with a final bill for water usage to the tenant on the last day of the tenancy, the landlord shall mail such reading and such final bill to the tenant no later than the day after the termination of the tenancy. If the water company subsequently charges the landlord a lesser rate than the landlord charged the tenant in the final bill, the landlord shall recalculate the bill forthwith based on the lesser rate and mail to the tenant the revised bill together with a rebate for any overpayment made by the tenant.

(j) A landlord shall not charge or recover, or allow to be charged or recovered, any additional servicing, administrative, establishment, meter-reading, meter-testing, billing, or submetering fee or other fee whatsoever, however denominated.

(k) Water usage separately charged to tenants pursuant to this section shall be delivered by the water company to the landlord and such landlord shall:- (1) be the consumer; (2) for billing purposes, be the customer of record; (3) be responsible for payment of the water company bills; and (4) be subject to any actions of the water company for nonpayment.

(l) In the event of nonpayment of a bill to a water company by the landlord, such water company shall have all the remedies against the customer of the water company available pursuant to any law, rule or regulation. A landlord may not shut off or refuse water service to a tenant on the basis that the tenant has not paid a separately assessed submetered water usage charge.

(m) The landlord shall retain an affirmative obligation to maintain in good working order the water supply system to each dwelling unit and any component thereof, including any water conservation device and submeter installed pursuant to this section, and to respond in a timely manner to any request by the tenant for the repair of any defect or malfunctioning in such water supply system, including any leak. Such water supply system to any dwelling unit and any component thereof including, but not limited to, any water conservation device and submeter installed pursuant to this section, shall be governed by and maintained in accordance with the state sanitary code. In the event of any overcharge by the landlord or any violation of the state sanitary code, the tenant shall have all rights and remedies provided under law for such overcharges or such violations including, but not limited to, the rights and remedies provided under chapters 111, 186 and 239.

(n) Upon receipt of a bill for water usage from the landlord and within the time allowed for paying the bill, a tenant may request that a person or entity with expertise in the installation and operation of water submeters and with no financial or other relationship with the landlord, test the submeter for the dwelling unit leased by the tenant to determine whether it is accurately measuring the water being used in the dwelling unit. If the submeter is found to be measuring more water than is being used in the dwelling unit, the landlord shall install a new submeter at his own expense and shall also pay for the cost of the test. In addition, the person or entity conducting the test shall determine as accurately as possible the amount of water that was improperly measured by the submeter in both the prior and current billing periods. The landlord shall calculate the amount the tenant was overcharged for the prior billing period and reduce the bill by that amount, or, if the tenant has already paid the bill, give the tenant a rebate in that amount. Upon receipt from the water company of the bill for the current billing period, the landlord shall calculate the amount of the bill attributable to the excessive measurement by the submeter and reduce the bill to the tenant by that amount prior to sending it to the tenant. If the submeter is found to be measuring no more water than is being used in the dwelling unit, the tenant shall pay for the cost of the test; provided, however, that if the tenant does not pay for the cost of the test, the landlord may add such cost to the next bill sent to the tenant and such cost shall be considered a part of the bill for purposes of paragraph (f) and clause (i) of subsection (4) of section 15B of chapter 186.

(o) In the event of a repair of a leak in the water supply system to a dwelling unit, the landlord shall determine as accurately as possible the amount of water that was measured on the submeter for the dwelling unit as a result of such leak, after a review of the billing records for the dwelling unit and consultation with the licensed plumber repairing the leak. The landlord shall then determine the amount of the bill for the billing period in which the leak occurred that was attributable to such leak and reduce the bill to the tenant by that amount or, if such bill has already been paid, grant the tenant a rebate in that amount; provided, however, that with regard to any leak about which the tenant knew or should have known, the landlord shall only be required to reduce the bill to the tenant, or to grant a rebate to the tenant, by or in an amount attributable to the water usage measured on the submeter as a result of the leak between the date the tenant gave notice to the landlord of the leak and the date the leak was repaired.

(p) A landlord may impose a charge for water use on the tenant of a dwelling unit that is connected directly to a meter installed by a water company; provided that the meter measures only water that is supplied for the exclusive use of the dwelling unit and only to an area within the exclusive possession and control of the tenant of such dwelling unit and does not measure water usage for any portion of any common area or by any other party or dwelling unit. The landlord and tenant shall have all of the same rights and obligations with respect to water charges for such dwelling unit that landlords and tenants have under this section with respect to water charges for any dwelling unit connected to a submeter; provided, however, that the landlord shall not be required to include in the certificate required by subsection (c) the information required by clause (3) of said subsection (c) for dwelling units connected to a submeter; and provided further, that subsection (n) shall not apply to dwelling units connected directly to a meter installed by a water company. Upon a request by the tenant of a dwelling unit connected directly to a meter installed by a water company, the landlord shall apply for a test of the meter to determine its accuracy in accordance with section 10 of chapter 165. The test shall be conducted in accordance with said section 10. The tenant shall reimburse the landlord for any cost incurred in connection with such test. If the tenant does not reimburse the landlord for such cost, the landlord may add such cost to the next bill sent to the tenant and such cost shall be considered to be part of the bill for purposes of subsection (f) and clause (i) of subsection (4) of section 15B of chapter 186.

(q) Nothing in this section shall be construed to increase or expand, change, eliminate, reduce or otherwise limit the liabilities or obligations of any water company that are set forth in any law, rule, regulation or order to the tenant of a dwelling unit who is receiving water provided to the building by the water company.

(r) Nothing in this section shall affect or impair the powers and duties of the department of environmental protection or the department of public health with respect to water supply under chapter 111.

(s) No charge for water usage may be imposed on the tenant of any dwelling unit in a public housing development pursuant to chapter 200 of the acts of 1948, chapter 667 of the acts of 1954, chapter 705 of the acts of 1966, or chapter 689 of the acts of 1974.

(t) The department of public health shall promulgate such additional regulations to the state sanitary code as it determines to be necessary to implement this section.

Approved December 16, 2004.