Submetering

SUBMETERING FAQ

1. Why does the Association need additional funds and how is submetering a more equitable funding mechanism?

Costs to maintain and repair the Association grounds, buildings, and infrastructure, and to provide services increase every year. Some are contractual and some are not. The latter are hard to predict and often vary widely from year to year. Our highest costs as a percent of our 2021 annual budget are for water (31%), our landscape contract (19%), and insurance (10%). The landscape contract and insurance are contractual and increase annually. Volatile, non-contractual costs include plumbing repairs, landscape extras and repairs, common area maintenance, and legal fees. Our plumbing system is of particular concern since it is over sixty years old.

In addition, 24% of dues is deposited into our reserve account each month. Large scale maintenance projects like roof replacement are funded from the reserve account. A recent estimate for replacing all three condominium roofs on a triplex was about $40,000.

Instead of increasing dues an equal amount to pay for everyone’s water, it’s more equitable to partially fund the Association by having owners pay an amount based on individual condominium water consumption.

2. How is the current water payment system unfair to owners?

Every homeowner pays the same amount for water, but there is a huge disparity in residential water consumption and bills between triplex buildings, and by extension, between condominiums.

The average amount paid through dues (based on the 2021 budget and current monthly dues of $375), per condominium, for residential water, is $111 per 2-month billing period. That equates to $333 per triplex. Yet, for the last twelve months the average residential bill per triplex ranged from $489 to $171. Average bills for three triplexes were higher than $333. Some or all of the people in those three buildings used more water than they paid for. Bills for sixteen triplexes were below $333. One bill was average. Some or all of those people paid for water they didn’t use, and thus, helped pay bills for the top three buildings. (Also, some buildings with below average bills likely had condominiums that used more water than they paid for.) People should pay for what they use like any other utility, such as electricity. Submetering achieves that goal.

The variance in the amount of water used per triplex follows a similar pattern month after month. For example, the three buildings with the highest water consumption from the September, 2021, bills used an average of 620, 449, and 274 gallons daily respectively. The three lowest were 37, 50, and 75 gallons used daily respectively. Every bill over the past year shows a similar disparity.

3. How would submetering reduce water consumption?

Submetering will provide a financial incentive to reduce water consumption and it will identify the amount of water used by each condominium. Currently, there is no compelling incentive for people to reduce water consumption and no one knows the amount of water used by each condominium’s residents. Over the past year, the Board provided all owners and tenants with bi-monthly reports of water volume and cost for each triplex in the hope that that information would motivate reduced water consumption. While some triplexes have reduced water use somewhat, overall, the reductions have not been substantial enough to affect the budget allocation for water. Submetering corrects both deficiencies that have contributed to the lack of water reduction.

4. Will submetering increase individual water bills?

Short term out-of-pocket cost will increase. Long term out-of-pocket cost depends on the amount of water used per condominium. As owner-paid water replaces a portion of the water budget funded by dues, the necessity for dues increases lessens. Also, if xeriscaping is implemented, irrigation water costs will decrease, further lowering the water budget and associated dues increases. The one certainty is that with submetering, each condominium’s water bill will depend on how much water each condominium’s residents use.

5. Will dues be decreased if owners pay for water?

The Board has not decided whether to reduce dues or not. Here are the arguments for and against a reduction.

Reduction:

· Since payment for water is included in monthly dues, it’s only fair not to pay that amount if owners pay for water directly.

· By adding water bill payments to existing dues, near term out-of-pocket costs will go up.

· Paying for water through dues provides a predictable monthly payment amount while submeter water bills will vary based on consumption.

No reduction:

· A dues reduction would reduce or eliminate a source of funding the Association needs for large projects like roof replacement and volatile, unpredictable costs like plumbing repairs, and thus would increase the need for funding the Association through higher dues.

· Residential water payment by owners can replace or reduce a future dues increase by lowering Association water costs.

· A dues reduction could result in underfunding the Association due to unpredictable reimbursement amounts. A dues reduction would be based on the amount of reimbursement to the Association from the submeter company, and that amount depends on the how much water residents use. But the reimbursement amount is unknown and hard to predict, making budget development more uncertain. (See Question 5).

6. Who pays water bills for rented condominiums?

It’s up to the owner and tenant to decide who is billed. If the tenant is billed, the owner will receive a copy of the bill. Ultimately, the owner is responsible for payment.

7. How much is the submetering service fee and who pays it?

The company that provided the lowest cost estimate charges a monthly service fee of $5.35 to $6.00 depending on the bill payment method selected by the owner. The fee is included in the bills that owners pay.

8. Are there any other fees or charges?

Yes. Meters must be recertified every ten years. The current cost is $85 per meter. Starting at year nine after installation, ten percent of meters are recertified annually. The annual cost is $510 paid by the Association. (10% x 60 meters = 6 meters. $85 x 6 meters = $510.) Beginning at year nine, this fee will, in effect, be permanent since it will take ten years to read all 60 meters and at that point the recertification cycle starts over. The Association pays for meter re-certification.

9. Who pays for repairs and replacement of submeters?

The Association pays for repairs and replacement of submeters. There is a one year warranty on the submeters.

10. Currently, the amount paid for water by each owner is predictable and constant. Will submetering change that?

Yes. The purpose of submetering is for each owner to pay for the water used instead of a constant rate that changes once a year, at most, with each new budget. Data from current water bills shows that water bills per triplex are fairly consistent. Once a water use level is established by a condo, it’s likely variation will be minimal. The amount of water used will determine the bill amount.

11. Who handles disputes over submetered water bills?

Homeowners direct complaints and disputes to the submetering company. The Association handles problems with San Diego Water Authority meters.

12. What is the duration of a submetering contract?

The contract term is one year, renewable annually.

13. What happens if an owner doesn’t pay a submetered water bill?

The submeter company will send late notices and reminders and can assess late fees. Ultimately the Association is responsible for ensuring payment of water bills. A new Association rule must be created to clarify the Association’s authority to do so. (The Board can create new rules and regulations. A homeowner vote is not required.)

14. Do other 7 Oaks condominium associations use submetering?

Yes, 7 Oaks condominium associations #3 and #4 have used submetering for several years. Board presidents report that boards and residents are generally pleased with the system. Each uses a different submeter company. HOA #1 requested estimates from both companies.

15. If the Board votes to adopt submetering, when will it start?

It takes six to nine months from contract signing to the start of submetering because it takes one or two months to receive the submeters after purchase, then five to seven months for the San Diego County Bureau of Weights and Measures to verify their accuracy. The Board plans on voting on this project at the January 11, 2022, Board meeting.