Going Down the Drain

By Barbra Murray, Contributing Editor

It’s a new year but not a new day for water sub-metering. While a few states and municipalities have jumped on the bandwagon of requiring sub-metering for billing of individual units at multifamily properties, the industry does not anticipate a major push for implementation of such laws on either the national or local level in 2012.

Sub-metering is currently a requirement in Massachusetts, North Carolina and Texas. If residents are to be billed for water, a multifamily developer must install sub-meters to accurately assess the usage of each individual unit. Certain municipalities are beginning to dive in, too. In 2010, San Diego became a trailblazer for obligatory sub-metering when the city passed an ordinance requiring sub-meters at all new multifamily developments, as well as in existing multifamily properties where interior plumbing is being replaced entirely.

The move to mandate sub-meters, however, has been slow to spread, and the prospects for a pick-up in pace in 2012 are not bright.

As 2011 drew to a close, there appeared to be a glimmer of hope on the horizon for mandated multifamily sub-metering in California with Assembly Bill 19, introduced by State Assembly member Paul Fong in late 2010. AB 19 flowed with ease through the Assembly Committee on Water, Parks, and Wildlife, which green-lighted the bill with a unanimous vote in March 2011. That, however, was just the beginning. Last year brought resistance and a series of amendments, and the New Year has brought renewed disappointment. Fong’s office confirms that AB 19 is, in legislative lingo, dead.

That’s right—water sub-metering legislation in one of the country’s most energy efficient states has gone down the drain.

“There are so many parties that want different things,” Jeffrey Peterson, executive vice president and general counsel for American Utility Management, says of AB 19. “Tenant groups don’t want administration fees, but landlords do. Utility companies do not want to be involved but some tenant groups and landlords are saying, ‘We do want you involved.’ There’s push and pull, and that’s the problem with state-level legislation. There are so many parties involved and there are so many voices having concerns, so they have a very difficult time pushing forward legislation to require sub-metering. It’s easier on the local level, but it’s more effective on the state level.”

Among the many voices that frequently come into play in official matters of submetering, are those who express wariness of the potential abuse of submetering laws among landlords. “In some states where you have no oversight at all, where there’s nothing preventing the landlord from garnering any income off of passing over utility costs, you may have those people who do the wrong thing,” explains Kimberly Godsey, director of legal affairs with energy management solutions provider Minol USA. “In Texas, we have rules that actually restrict what we can and cannot do as far as submetering [and] allocation. In Florida, you have those rules; in North Carolina, you have those rules.”

Advocating a system of checks and balances for multifamily submetering, Godsey believes, is a task that falls on the shoulder of conservation associations. “You’re seeing some states giving in to relaxed efforts in regards to submetering and some states hindering efforts to push it. So if we all don’t band together to help push these efforts in a way that everyone is accepting of the thought of submetering, and are not seeing it as an effort to increase the landlords profit or undermine the tenant, then we’re not going to have a broad agreement across the states.”

And then there are those occasions when the unexpected can cause a pool of naysayers to evaporate. Crisis put the Peach State on a fast track to making sub-metering at multifamily properties mandatory. “They’re running out of water; that was a big reason why Georgia wanted to put in rules requiring sub-meters,” AUM’s Peterson said. “A great way to make people use less water is to have them know what they’re using.” The severe drought led the U.S. Secretary of Agriculture to identify 151 of Georgia’s 159 counties as federal agriculture disaster areas in 2010, and in 2011, 150 counties earned the same unfortunate designation. Officials took swift action in light of the shortage. With the passage of the Water Stewardship Bill in 2010, Georgia became the first state to require sub-metering for both multifamily and commercial buildings.

The increasing scarcity of water may very well become the inspiration for new laws requiring sub-meters at new multifamily developments in other states. “I think what’s driving sub-metering right now is water shortages. It’s pretty clear that there’s a correlation and I think that’s where you will see legislation occur,” Harry Apostolos, president of Guardian Water & Power, notes. “Sub-metering can bring about anywhere from a 30- to 40- percent drop in water usage. A large percentage of people live in multifamily housing and a lot of it is not metered. It’s a way to conserve water usage by sending a price signal to residents so they can associate a block of water with the cost, and that’s what brings about conservation, making the connection between how much they use and the bill they get every month.”

AUM’s Peterson agrees that sub-metering laws will become more popular among states and even on a national level when options for addressing shortages dwindle. In other words, lawmakers will make the laws when they have to. “I would say that if certain issues arise—like population growth, droughts and the aging infrastructure rearing its ugly head and causing issues with capacity—everybody’s going to start looking at how we can conserve water,” he attests. “The multifamily industry is a large market and a large user of water and, without any requirements, tends to be wasteful.” As per a recently released report by CNT Energy and AEEE, multifamily units account for 17.4 percent of all residential housing in the country. Washington, D.C., New York and Hawaii lead the list with respective multifamily-unit percentages of 49.7, 32.4 and 32.3 percent.

Still, despite the benefits of conserving water and the reduction of costs for usage, laws necessitating multifamily sub-metering are by no means becoming a trend—at least not yet. Some believe a national mandate would solve the problem in one fell swoop. “I don’t think we’re a long way away from it,” Godsey of Minol USA says. “I know everything’s been pointing toward conservation efforts as a whole nationwide, so sub-metering being a part of that, I don’t think we’re far from it. Will it pass this year? I’m not sure because the magnitude of such oversight is going to fall upon the states’ hands. I think that’s what’s going to be the primary issue.”

Another major barrier that is hindering action on sub-metering is a simple one. “There’s a ‘there are bigger fish to fry’ mentality,” Peterson notes. “Legislators go onto the energy side—the high-efficiency features, the installation of Energy Star appliances in apartments—rather than the water side. The idea is, ‘Let’s tackle the low-hanging fruit, big costs first and then we’ll tackle the smaller things.’”

On a national level, Peterson, Godsey and Apostolos concur: Sub-metering legislation is coming, but it’s anyone’s guess as to when it will make a splash in the halls of leading lawmakers. “It will probably be when the cost of water gets to a point that it shows up in the newspaper headlines and people are made more aware of it,” Peterson speculates. “But it’s hard to predict if that’s 2012 or ’14 or ’20. At some point it will, but nobody knows when.”