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

Question

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

Justin R. · Answer

@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.

Rigo V. · Answer

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!

Matthew Forrest · Answer

@John Lockhart Woah that's rough. My assumption as I was reading that was that they had some bitcoin mining rigs going, but I guess a grow house will do it to! Were utilities included in the rent?

Ronnie S. · Answer

@Justin R. Thanks for the info....do you have any recommendations on the sub meters?

Justin R. · Answer

@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.

John Lockhart · Answer

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.

Ronnie S. · Answer

@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...

Dan H. · Answer

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).

Gagan P. · Answer

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.

Dan H. · Answer

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.

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

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