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Understanding the Changes Brought by AB 604 to Mobilehome Parks in California

On October 13, 2023, Assembly Bill 604 (AB 604) was signed into law which changed the way private water purveyor’s charges are treated in mobile home parks in California. AB 604 basically builds upon Assembly Bill 1061 (AB 1061), which passed in 2021. Specifically, AB 1061 set particular limits as to what mobile home parks can charge residents for submetered water services provided by them under a master-meter arrangement where the park gets its water from either a water purveyor or another third-party water provider. However, a controversy arose as to whether AB 1061 applied to mobile home parks who were supplied water by a private water purveyor subject to the jurisdiction of or provided water services regulated by California Public Utilities Commission (CPUC).

To address this issue, AB 604 amended Section 798.40 of the Civil Code and Section 7205.5 of the Public Utilities Code. Section798.40 of the Civil Code has been revised to include a new section (f) which states: “The provisions of subdivision (c) shall apply to all management that elects to separately bill water service to a homeowner as a utility service pursuant to Section 798.41 and to provide submetered water service to homeowners as a master-meter customer of the water purveyor, as a part of the regular bill for water service, including where the water purveyor or the mobilehome park is subject to the jurisdiction, control, or regulation of the Public Utilities Commission.” Section 7205.5 of the Public Utilities Code was amended to state that a mobile home park providing submetered water service “is not a public utility and is not subject to the jurisdiction, control, or regulation of the CPUC if each user of the submeter service system is charged at the rate which would be applicable if the user were receiving the water directly from the water corporation, or if management of the mobilehome park complies with subdivision (c) of Section 798.40 of the Civil Code.” [Section 7205.5 of Public Utilities Code]

Key Changes Required by AB 604

Mobile home parks that provide submetered water services are exempted under AB 604 from being classified as public utilities. Nonetheless, these exceptions are only applicable if the mobile home park follows through with the rates and charges specified in the MRL. If they comply with this requirement, these mobile home parks are not deemed as public utilities and hence not regulated by the CPUC.

Also important in AB 604 is the limit placed on administrative and billing fees that can be charged to residents. For each resident, the mobile home park may charge the lesser of $4.75 or 25% of the volumetric usage charge. These amounts are then adjusted every year based on changes in the Consumer Price Index (CPI).

Another major element of AB 604 is that park management must post the actual current residential utility rate information or an internet website address where such information can be accessed, in a conspicuous place. Should a third-party billing agent or company carry out billing for this park, park management should provide each resident with the name, address, and telephone number of the billing agent or company.

In summary, upon the passing of AB 604, park management that provides submetered water services must ensure that all their practices align with AB 604 and MRL Section 798.40. This may involve implementing of new billing systems; training staff concerning the changes brought about by AB 604; and maintaining regular audits to ensure compliance with AB 604 and MRL Section 798.40.

Please contact Mai T. Nguyen at Hart Kienle Pentecost if you have any questions. She can be reached at 714-432-8700, Ext. 364.