CASA Issues Member Alert on Potential Changes to How Agency Charges Connection Fees

  October 5, 2016

New Law Could Require Changes in How Your Agency Charges Connection Fees

On September 27, Governor Brown signed SB 1069 by Senator Bob Wieckowski into law. This bill takes effect January 1, 2017, and could affect how CASA member agencies charge water and wastewater connection fees for accessory dwelling units (ADUs).  An ADU is defined as an attached or a detached residential dwelling unit that provides independent living facilities for one or more persons, including cooking and sanitation services, and is located on the same parcel as an existing single-family dwelling.
SB 1069 was designed to address severe housing shortages in certain parts of California by streamlining and restructuring local ordinances dealing with ADUs. Two companion bills (AB 2406 and AB 2229) were adopted as well, though these bills address “junior” ADUs and are less likely to impact local wastewater agencies. As part of that larger package of changes, SB 1069 addressed local water and wastewater connection fees and capacity charges imposed as part of ADU development. The new law (Government Code section 65852.2(f)) makes three distinct changes:
  • states that a local agency (as defined in the bill) may not treat ADUs as brand new residential uses for connection fee or capacity charge purposes
  • states that a local agency may not require a residential customer adding an ADU that is contained within the existing space of a single-family residence or accessory structure (e.g. a garage conversion) to pay a connection fee or capacity charge or require a new or separate utility connection for the ADU
  • for all other ADUs that are not contained within the existing space of a residential unit (i.e. any “new construction”) a local agency can still impose a connection fee or capacity charge, but it must be “proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system.”
This legislation is not intended to impact any ongoing service fees or charges; its effect is restricted to connection fees and capacity charges only.
Throughout 2016 CASA and other local government associations were involved with negotiations regarding this legislation and, specifically, the connection fee language. Earlier versions of the bill could have been interpreted to prohibit wastewater agencies from charging any connection fees for ADUs under any circumstance, which would have been a significant and unsustainable burden on wastewater agencies. The revised, adopted language may require changes by some agencies to ensure compliance with these new means of measuring proportionality in charging these fees, but represents a significant improvement from the original bill.
CASA continues to have concerns regarding these changes to the law, particularly as they relate to compliance with Propositions 218 and 26. However, because each local agency’s connection fee methodology is different, it is not clear whether your agency’s existing ordinance may already meet the standard set forth in the legislation, or whether changes might be required. As such, individual agencies should consult their legal counsel on this matter before taking any action.
For additional information, please contact Adam Link.
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