HB 1421, sponsored by Rep. Jeremie Dufault (R–Selah), prohibits municipal-owned utilities from using liens to collect a tenant’s unpaid utility bills. The bill prohibits cities from collecting unpaid or delinquent charges from a property owner when the account is in a tenant’s name. The bill also prohibits a city from refusing to open utility accounts for tenants. Currently, some city-owned utilities only allow accounts in the name of a property owner. Finally, the bill broadens the definition of utility or service beyond the standard water, sewer, electricity to include “hot water, heat, public services, and garbage”.

A version of this bill was heard during 2019 and 2020 regular sessions. We did negotiate a compromise on the topic in 2020 but the bill didn’t advance. While certain elements of that compromise are included in this year’s proposal, HB 1421 adds an additional provision that is concerning for cities. Last year, cities agreed to limits on lien authority when the delinquent account was in a tenant’s name. The new provision added in Section (5)(b) of HB 1421 to prohibit cities from refusing to allow accounts in a tenant’s name is problematic. There are cities that only allow accounts to be in the property owner’s name. This provision removes a final option for insuring that a utility can collect on delinquent accounts.

The result of HB 1421 would be fewer options for cities collecting delinquent payment—likely resulting in a higher number of unpaid bills, and thus driving up costs for all other ratepayers.

Cities have maintained that it is appropriate for landlords to be responsible when a tenant has a delinquent bill because they have tools, like withholding a deposit, to help hold the tenant accountable.

This proposal comes at a particularly difficult time as many utilities have seen a financial impact from the pandemic and the emergency shut-off moratorium in place since last spring.

In November 2019, AWC conducted a survey to gather city data regarding usage of lien authority. Cities overwhelmingly report that using lien authority is the only sure way to collect payments, as they are often prohibited from shutting off water or sewer services. Due to the public health emergency, utility shut offs are prohibited throughout the state—leaving cities with a handful of options to collect delinquent payments.

Cities use a variety of steps before relying upon lien authority: cities report using letters in the mail, door hangers, late fees and penalties, phone calls, and collection agencies. However, cities reported that liens are the most effective way to collect delinquent payments on vacated or foreclosed properties without transferring the burden to the subsequent property owner.

At the time of the survey, we estimated that the loss of city lien authority would result in over $6 million in lost city revenue. However, due to the prolific economic distress caused by the pandemic and the moratorium on utility shut offs and late fees, we estimate this number could be as high as $31 million.

Dates to remember

HB 1421 is scheduled for public hearing in the House Housing, Human Services & Veterans Committee on February 9 at 8 am. The bill is scheduled for executive session in the Committee on February 11 at 1:30 pm, and again on February 12 at 10 am.