Should I separate utilities or not with ADU unit in Santa Monica

20 Replies

HI Biggerpocket Team!

I am about to break ground on the remodel of my home and am building an ADU over my garage for the same property.

My question is....is it worth spending the money to separate the utilities or just have one water, electric and gas meter?

During my search on BP it looks like some people don't believe they will get the ROI on spending the money to separate meter on any property...then there are some that do RUBS, submeter...ect.

ADU's are unique and wanted to see if anyone has done one and what their experience and thoughts were.

Any and all advice is appreciated.

Thank you,

Ronnie

First, is this legal to build this?   Not my business, but you don't want to get shut down.

Since this is your home and it is a smaller unit, you don't have to separate them.  If this was two independent units, I would.

@Brian Ploszay  

Yes...everything is permitted and legal.....good looking out!

I will be living in the front house and the ADU will be built over the detached garage.

So you are saying you would not spend the money to separate the utilities?

Thanks...

I have a 4600 sf house on 20 acres that we built in 2004. We also built a large shop/garage (2500 sq. ft. but I have to reduce livable space to 1200), with a room that has a bathroom and kitchen, and upstairs area. All of that was done with permits, inspections, etc. However; somehow the County (Shasta) never entered the info on the septic permit for the garage into their system, and are wanting me to convert to an ADU. In order to do that I have had to redesign the septic, will pay 2000 for building permit (again) AND .. have to pay 8400 in impact fees. I will also put a seperate meter on the new ADU, which will cost 6000-10000.

Once complete, ADU's can have their own address, and are a legal unit. Therefore; if you want to rent it out, you will probably want a separate meter for utilities, otherwise you will have to calculate the usage and allot the amount owed for utilities. For you in San Diego it may not be a big deal, however; with PG&E, it's spendy.

Out of curiosity, what are your permit fees, impact fees, etc. to do the conversion? 

@Ronnie S. I have personally separated water and electric utilities at every small MFR I've purchased - generally not through actual new utility-owned meters, but through sub-meters I purchase and install myself. I've found it much easier to charge people for their utility usage when they know (and I can prove) exactly how much they've used. The one place I tried RUBS was resisted by the tenants.

So long as you're planning to rent the ADU to someone, I don't see why it'd be the same. I'm doing several new construction homes right now that have ADUs built in and they're each getting sub-meters installed for water and electric. In my temperate market, not much gas gets used, so I haven't cared much about sub-metering that.

You're building on top of a garage - it'll be chump change to install your own submeters.

@Ronnie S. I use the bronze DLJ Meters (ala http://www.jerman.com/dljmeter.html) for water since mine are generally outside and mounted on the home (and not housed in a box).

For electric, talk to your electrician - used (or new) circular ones just like utilities use are readily available and are probably the cheapest option to wire for, purchase, and install since electricians are really used to them.  They're also big and ugly.  If it needs to be more discreet, you can find analog (https://goo.gl/DLQwFZ) or digital (http://a.co/gJbePoa) ones through a web search.

Since I plan to hold really long term, the hassle and labor to install is large, and I don't have to have to coordinate with tenants around utility-related work in the future, I buy the most durable meters I can find in hopes I don't need to touch them again.

@Justin R. Do you need to manually read those meters, or is there a remote option available? Those meters sound great if I can read them in a wireless manner, but would be a hassle to travel to properties once a month to get an accurate reading. 

@Christian Mkpado There are remote readers that upload to internet, but far too expensive when just a few units.

I charge an estimated utilities each month, then read them every 6 months or so when I’m already at the property (or when a tenant moves out) and either charge or credit the difference between estimated and actual.

Pretty simple and economical.

I am a big proponent of separating utilities. By separating and passing along those costs to the tenants you automatically improve your ROI. With this move you also make your house MUCH more attractive to any potential buyers if you decide to sell. Look up the most recent podcast (i forget the number) where the guest talks about hidden ROI. This is one of them!

Originally posted by @Ronnie S. :

HI Biggerpocket Team!

I am about to break ground on the remodel of my home and am building an ADU over my garage for the same property.

My question is....is it worth spending the money to separate the utilities or just have one water, electric and gas meter?

During my search on BP it looks like some people don't believe they will get the ROI on spending the money to separate meter on any property...then there are some that do RUBS, submeter...ect.

ADU's are unique and wanted to see if anyone has done one and what their experience and thoughts were.

Any and all advice is appreciated.

Thank you,

Ronnie

Hi. I know this thread was over a year ago. Wanted to follow up if you ever separated the utilities on your project. Im going to put an offer on a property with where Im going to convert the basement into an ADU. I will be renting out both main house and ADU... so its best if the utilities are separated. Property is in Los Angeles, not sure how tough it was to get it done.

I have eight units in Riverside. They were all on one meter. My personal use was less than $50 a month. With the ADU's it pushed my Edison electric bill into tier five and my bill went to $2500+ every month.

When I asked my renter's to be careful they stopped paying rent. Two were running businesses out of the ADU's, laundry and legal weed. By law I was required to provide all utilities through the eviction process.

Edison can stop service to metered residents but a private provider cannot. Edison will also insist that the dweller settle before service is turned back on. 

I would definitely have Public Utility meters on each unit and for each utility. 

I emailed a building official with the City of Oakland today and was told this:

"The whole confusion is not our requirement. PG&E is requiring that new units have meters. Inspections has stated that they are not required to enforce PG&E requirements if PG&E won't be involved in the project. So, if a new main electric service panel is being installed then inspections will require the 2 meters and will remain neutral if the panel remains. Same is true for the gas meters. However, the owners should be made aware that PG&E can require the additional meters if they find out about the unit."

Sounds like even if it's not required in the local jurisdiction, PGE may require it someday.

Originally posted by @Tom Mcco :

I emailed a building official with the City of Oakland today and was told this:

"The whole confusion is not our requirement. PG&E is requiring that new units have meters. Inspections has stated that they are not required to enforce PG&E requirements if PG&E won't be involved in the project. So, if a new main electric service panel is being installed then inspections will require the 2 meters and will remain neutral if the panel remains. Same is true for the gas meters. However, the owners should be made aware that PG&E can require the additional meters if they find out about the unit."

Sounds like even if it's not required in the local jurisdiction, PGE may require it someday.


SB13 prohibits this if the ADU is being added out of existing space. "For an accessory dwelling unit described in subdivision (e), a local agency, special district, or water corporation shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge."

PG&E cannot legally require a meter if the ADU/JADU is being built in an existing structure.

Originally posted by @Dan Heuschele :
 SB13 prohibits this if the ADU is being added out of existing space.    “For an accessory dwelling unit described in subdivision (e), a local agency, special district, or water corporation shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge.”

PG&E cannot legally require a meter if the ADU/JADU is being built in an existing structure.

 See Bolded section. PG&E is not a "local agency, special district, or water corporation". Looks like the loophole was intended in the Bill.

Originally posted by @Gagan P. :
Originally posted by @Dan Heuschele:
 SB13 prohibits this if the ADU is being added out of existing space.    “For an accessory dwelling unit described in subdivision (e), a local agency, special district, or water corporation shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge.”

PG&E cannot legally require a meter if the ADU/JADU is being built in an existing structure.

 See Bolded section. PG&E is not a "local agency, special district, or water corporation". Looks like the loophole was intended in the Bill.

How is it not a local agency? The intent of the regulation is that there is no mandate to subdivide utilities for an ADU within an existing structure.

Originally posted by @Dan Heuschele :

How is it not a local agency? The intent of the regulation is that there is no mandate to subdivide utilities for an ADU within an existing structure.

 I would tend to agree, but SB13 starts off by saying (in Paragraph 1):



https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB13

"The Planning and Zoning Law authorizes a local agency, by ordinance, or, if a local agency has not adopted an ordinance, by ministerial approval, to provide for the creation of accessory dwelling units in single-family and multifamily residential zones in accordance with specified standards and conditions. Existing law requires any ordinance adopted by a local agency to comply with certain criteria, including that it require accessory dwelling units to be either attached to, or located within, the proposed or existing primary dwelling or detached if located within the same lot, and that it does not exceed a specified amount of total area of floor space."
This implies that a local agency would be a local code agency/government body, not a state-owned corporation.



Also, California Code in another piece of legislation does have a definition:

https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV§ionNum=54951
"As used in this chapter, “local agency” means a county, city, whether general law or chartered, city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency."

Municipal corporation, or "local" public agency.

Originally posted by @Gagan P. :
Originally posted by @Dan Heuschele:

How is it not a local agency? The intent of the regulation is that there is no mandate to subdivide utilities for an ADU within an existing structure.

 I would tend to agree, but SB13 starts off by saying (in Paragraph 1):



https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB13

"The Planning and Zoning Law authorizes a local agency, by ordinance, or, if a local agency has not adopted an ordinance, by ministerial approval, to provide for the creation of accessory dwelling units in single-family and multifamily residential zones in accordance with specified standards and conditions. Existing law requires any ordinance adopted by a local agency to comply with certain criteria, including that it require accessory dwelling units to be either attached to, or located within, the proposed or existing primary dwelling or detached if located within the same lot, and that it does not exceed a specified amount of total area of floor space."
This implies that a local agency would be a local code agency/government body, not a state-owned corporation.



Also, California Code in another piece of legislation does have a definition:

https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV§ionNum=54951
"As used in this chapter, “local agency” means a county, city, whether general law or chartered, city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency."

Municipal corporation, or "local" public agency.

I believe the intent is that existing space cannot be forced to add meters but admit that there is some vagueness. If anyone is interested in the definitive answer, they can email HCD directly (use google to obtain the email address as BP would not allow me to include the email address but it is ADU@HCD.... (standard CA government domain)). This email is good for any ADU related questions. If you send an email on this item, consider posting the definitive answer on this thread.

As you can imagine, they are spread a little thin with all the new ADU regulations and responding to not only inquiries from investors but also reviewing various jurisdictions ADU regulations and answering the questions from the various jurisdictions (so do not expect an instantaneous response - I was also told that they received no additional funding resulting from the increased workload of the various ADU regulations). I, therefore, suggest spending some time on trying to find the answer yourself prior to asking any question. However, HCD realizes interpretations are not always easy. If the local jurisdictions need help figuring it out, most investors will also have a hard time deciphering all aspects (plus 6 separate regulations does not make it any simpler).

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