Legislation now on Gov. Gavin Newsom’s desk proposes a transfer of vast wealth from California homeowners to California utility companies. Senate Bill 900 would force homeowners to maintain and repair the pipelines delivering gas, water, and electricity to the millions of townhomes, condos, co-ops, and planned developments in the state.
We urge the governor to veto SB 900, because it undermines his mission to build and maintain 2.5 million affordable housing units in the next six years and to end homelessness.
How does SB 900 undercut his campaign? By making homeowners assume costs now on the balance sheet of PG&E, SoCalGas, and other utilities. “Affordable housing” means that homeowners ought to spend no more than 30% of monthly income on mortgage, taxes, insurance, and utilities combined. SB 900 would blow up this cap.
None of the Legislature’s policy committees tried to figure out the dollars involved in shifting maintenance and repair costs from the utilities to homeowners. However, we can get a good idea of the price tag by studying the Orange County incident that triggered SB 900.
Last year 200 working class Hispanic homeowners were each billed $4800 to pay a $1 million dollar bill to repair gas and water lines delivering service to their old condos. What began as a modest project to repair a few leaking gas lines ballooned into a $1 million dollar bonanza as SoCalGas seized the opportunity to get the homeowner association to map and rebuild the utility’s own pipelines in the subdivision. The cost ballooned further as workers repeatedly damaged the water lines. All the bills were sent to owners.
Along with the $4800 bill, the association board sent a letter telling owners they had 30 days to pay, and, if they didn’t, the board would start to foreclose under state laws permitting associations to foreclose for nonpayment of assessments.
SB 900 would replicate the Orange County scenario to all of California’s 55,000 homeowner associations, which are often the first rung on the homeownership ladder for countless first-time buyers, seniors who are down-sizing, and families of color – like the Orange County owners — getting a foothold in the housing market.
SB 900 says that maintenance and repair of utility lines will be financed by the association’s reserve accounts and, if no reserves exist, then financing will be done through loans and emergency assessments like the one levied on the Orange County owners. “Emergency assessments” by statute have no dollar cap and do not require homeowner consent.
Furthermore, SB 900 is clear that owners will have no say in these financing decisions: only the association board will decide whether to take out a multi-million-dollar loan and levy emergency assessments as collateral or hire a contractor to start digging trenches. An August 20 amendment to SB 900 even lets a single board director “start the process” to maintain and repair utility lines. Asked about the amendment, the author’s office wrote in an email that “start the process” is intentionally left vague.
What isn’t vague is that SB 900 threatens the ability of working Californians to keep their homes affordable and to protect them from foreclosure. SB 900 wants to remove a huge cost from the balance sheet of California utilities and put it on the shoulders of homeowners, who can least afford it. The legislation puts millions of Californians living in townhomes, co-ops, and condos at risk of foreclosure. We think SB 900 will be a tool to promote homelessness – not to end it.
We urge the governor to VETO SB 900.
Marjorie Murray is president of the Center for California Homeowner Association Law.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.