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Blaine Morris’ 2014 President of Marin Association of Realtors 01/27/14 Monday Memo – New Residential and Commercial Water Conservation Retrofit Rules–SB 407

The rest of the CAR Director team and I have been in San Diego this week at the winter meetings.  As usual, lots of stuff to report, discuss and learn across all spectrums of our business.

I was out last night after the meetings with a non-Realtor friend, and he wanted to know what in the world we do that requires us to come to these meetings three times per year.  I explained that the business and the regulatory environment are constantly changing. We need to be ahead of trends to respond to the needs of our members, clients and property owners.  We need to be ahead of the game with our government officials.  We need to coordinate the ever-changing transactional environment.  And most of all, we need to make sure that you, our members, have your voice heard at the highest levels of our profession.

I will have a more complete report from CAR next week.

New Residential and Commercial Water Conservation Retrofit Rules–SB 407

I want to make sure all of you are aware of an emerging new government regulation that became law on January 1, 2014.  Last fall, our friend and colleague Jim Fraser alerted me about the pending implementation of Senate Bill 407, which was passed by the California legislature in 2009 and signed by Governor Schwarzengger in October 2009..and promptly forgotten by just about everyone.  Net-net, there are some very substantial water conservation retrofit requirements on existing single family homes which are to be enforced when our clients and property owners go to get a permit…for just about anything they want to do to homes built before 1994.

This was news to all of us at MAR.  The law passed with little fanfare in 2009, probably because the implementation date was five years away.  When Assemblyman Levine was speaking to the Women’s Council of Realtors last fall, 2013 MAR Secretary Judy LeMarr asked him about it but he was not familiar with the law.  Later, 2013 MAR President Jack Wilkinson called the San Rafael Building Department, and his contact said he had just learned of the law the day before and they had no plan at the time for its required implementation.  Earlier this month, I was at a city inspection and asked the building official what the plan was and he told me that he and his colleagues were only now starting to formulate an implementation plan.

In a nutshell, SB407 requires that “On or after January 1, 2014, for all building alterations or improvements to single family residential real property, as a condition for issuance of a certificate of final completion and occupancy or final permit approval by the local building department, the permit applicant shall replace all noncompliant plumbing fixtures with water-conserving plumbing fixtures.”

Low-flow toilets, faucets, and showerheads.  It’s déjà vu all over again!

You can read the text of the whole bill here:

Given our current extreme drought and MMWD’s request this week for a 25% reduction in water use, it’s hard to argue with the spirit of these regulations.

What does this mean for us?  Well, this is not a point-of-sale requirement, so it shouldn’t come into effect for our transactions closing.  But it is absolutely something we need to alert our clients about, because as the law is written, ANY permit will require these retrofit requirements.  And what about the very common case where a homeowner got a proper permit for work to be done, but didn’t close out the permit when work was complete?  Does that mean that to close some 5-year-old permit our clients will need to replace all the toilets, faucets, and showerheads?  Really?  That’s certainly something that might come into play in the last days and loose ends of a transaction.  This area of the law is unclear.

We need some clarification, and it’s a work in progress.  Our cities are just now working through the implementation process.  The building official I spoke with this month said that the enforcement overhead requirements to fully retrofit a house for ANY permit are just about impossible from a time and budget standpoint.  He said that it’s possible that for “minor” permits (roofs, water heaters, etc) there will just be a handout informing the homeowner of these requirements.  For a remodel or “major work” it will absolutely be required.  Where is the line drawn?  No for water heaters, yes for kitchen remodels?  What about a window or siding project?

So let’s all feel our collective pain together.

We are on it at MAR.  We will continue to press our local building officials for clarity about these new requirements.   And to bring it back to CAR, yesterday we received a report from the Land Use and Environmental Policy Committee suggesting that, given the current drought and recently enacted legislation, the CAR 2014 Budget be modified to include funds for education of the public and our members on these developments.  This should be brought for a vote before we leave San Diego.

Be aware, tell your clients that this is a developing issue, and I assure you that we will have more info for you shortly.

Have a great week!