OPPOSE - Point of Sale Mandate on Nov. 14 CC Agenda

Mayor Mary Ann Nihart

and Pacific City Council

170 Santa Maria Avenue

Pacifica, CA 94044

RE: Pacifica Point-of-Sale Inspections for Sewer Laterals

Dear Mayor Nihart and Council;

On Monday, November 14, city staff will present an ordinance for City Council’s consideration that will mandate the inspection and repair or replacement of damaged sewer laterals on any property that is A) sold in Pacifica before the sale is allowed to close; B) undergoing a remodel that costs more than $75,000; or, C) adding a bathroom or other significant plumbing fixture to a building.

This methodology is commonly referred to as a “point of sale” approach, and in all candor, it is inequitable; will not attain what the city is seeking to achieve in the treatment, disposal and control of wastewater and industrial waters in a timely manner; and, still leaves Pacifica open to further sanction/litigation until a full remediation of the system is completed.

The San Mateo County Association of REALTORS® (SAMCAR) is opposed to this discriminatory scheme and urges the Council to reject same. At a minimum, this issue needs to be deferred for 180 days to allow an opportunity to explore alternatives with the Council and staff. Why?

Point-of-sale mandates are inequitable. They apply only to those who sell a home or property. Point-of-sale mandates are an unfair addition to home sales transactions, as they place a city-wide problem on the shoulders of a small segment of the population: buyers and sellers.  An issue that impacts the entire community, such a sewer lateral inspections, should have a solution on a city-wide basis.  Ensuring the quality of the sewer lateral system throughout the city is an important health and safety issue… but such an immediate need will not be adequately addressed through point-of-sale. 

More efficient and effective methods should be employed. For example, a city-wide approach using flow meters to detect particular ‘hot point’ inflow and infiltration in areas with Orangeburg pipe, then adjusting the CIP to target those areas.

Point-of-sale mandates are inefficient. Commercial and multi-family residences sell at much lower turnover rate than typical single family dwelling.  As of the most recent annual figures (2010), the turnover rate throughout the county averaged 2% per year.  Meaning it could take approximately 50 years to address the sewer lateral issue IF the city waits until the point-of-sale to achieve the inspections/repairs.

Point-of-sale mandates are inconsistent. What about financing improvements for the 82 miles of public sewer mains? That’s up to the city, with the suggestion that the city consider increasing its wastewater fee rates for property owners in order to collect the needed revenue. Interesting as that is a city-wide approach.

Point-of-sale mandates can cause someone to lose a home they’re trying to purchase. Our concerns regarding point-of-sale mandates also touch upon the transaction itself.  In our current economic climate, there are a number of short sales and real estate-owned (REO) transactions that, for a number of reasons, require an expedited escrow process.  Adding an additional, costly step serves only to delay – or in some instances, void – the transaction for the home buyer and seller. 

Point-of-sale mandates are costly. The cost of sewer lateral repair or replacement averages $7,500 to $25,000. In an area such as Pacifica, any incremental costs might render a home effectively unaffordable, especially for first time home buyers.  On an individual case basis, replacing a lateral is expensive and the cost can escalate depending on the length of pipe and whether it goes beneath concrete or into the street. City staff has said it will negotiate with one or several contractors to get a reduced, bulk rate for the required projects. The city will also to provide grants to applicable property owners up to total disbursements of $650,000. 

Based on the high estimate for repair/replacement, that means a total of ONLY 25 houses will benefit from the grant program if 100% of the cost is reimbursable; 50 houses if the reimbursement is halved. According to MLS Listings, Inc., 230 home sales closed last year in Pacifica, so it would take the city 4+ years just to handle just what transpired in 2010.

Point-of-sale mandates are not covered by home owner’s insurance. Until recently, most home owner’s insurance policies would cover damage or repairs on the property specific, which is measured to the property line. However in most policies, sewer laterals are now specifically exempted from such coverage. (Also remember, the vast majority of policies also did not cover repairs from the property line to the street… yet that may be where the lateral breach is located. This cost for this municipal service would then wholly borne by the home owner as the responsibility for sewer laterals is being transferred to property owners – residential and business alike.

Finally, the Regional Water Quality Control Board (RWQCB) is demanding that the city have zero discharge or overflow problems in its sewer system by Jan. 1, 2019. Bottom line: You will not accomplish that using a point-of-sale mandate, so the RWQCB can place further sanctions on the city/sue you again.

Thank you for the opportunity to provide our input and we look forward to the Council’s continuance of this issue for further study.

Respectfully,

Paul Stewart

Government Affairs Director

San Mateo County Association of REALTORS®

850 Woodside Way / San Mateo, CA 94401

paul@samcar.org

(650) 696-8209 / (650) 342-7509 (fax)

Submitted by Jim Wagner