In the midst of what almost everyone agrees is a housing affordability crisis in Austin, planners and residential contractors have discovered a new rule that significantly increases the cost of retrofitting garages into apartments and building new granny flats.

Longtime Austin architect Girard Kinney said that the Austin Water Utility’s decision to require that new and retrofitted secondary dwellings have an entirely new water line and an individual meter as opposed to a submeter has increased the cost of granny flats by between $10,000 and $25,000.

The utility has also stopped doing the work itself, requiring contractors to hire their own engineers and workers to dig up the street to install a line.

Kinney says he is not alone in that assessment, and that other architects and contractors have verified his information.

Sabina Daly, owner of Jade Construction, is one of them. She told the Council Committee on Utilities last week, “I’ve recently had two clients have me do estimates (for garage apartments) and then put the projects on hold” because she has not been able to find a water engineer to do the work for less than $20,000.

Last December, City Council passed a resolution intended to encourage water conservation in two-, three- and four-unit residential developments “through cost-effective means,” indicating its support of submetering for such spaces.

That resolution specifically also addressed reducing construction costs. Council directed the city manager to identify possible code amendments and administrative changes to encourage submetering and report back to Council before the end of January.

AWU Director Greg Meszaros addressed submetering in a memo dated April 9. He wrote, “Our analysis indicates that on a project typical of the kinds of applications that Austin Water has been receiving lately for new or converted garage apartments in the central city, the cost of the public meter when compared to a private submeter was approximately $400 more (this includes the cost of the meter itself and the associated inspectional capital recovery fees).”

Meszaros added, “Regardless of whether a public meter is used for each unit or private submeters are used, there may be a need to upgrade the water service line to accommodate the increased water demands created by the additional unit(s).”

AWU Assistant Director David Juarez said, “What’s happening a lot of times, especially in the infill areas because (the line) was put in just to provide service to single-family home … when you add additional fixtures, there’s not enough flow in some cases, depending on the size of the line, to meet the requirements to provide that flow. So that triggers an upgrade or replacement of that existing line.”

Kinney pointed out that the additional “public line” is a big cost. He acknowledged that the contractor may need to increase the size of the water line, but that there is a big difference between enlarging the line and adding a tap.

“That is the largest expense,” Kinney said. Instead of simply enlarging the line at the spot where it comes off the main line to go to the secondary unit, “you now have to run a new water line from out in the street to the backyard,” and that may very well involve digging up the driveway. He said the tap plan itself costs $5,000 to $6,000.

Juarez said the utility used to perform the work but no longer does. “Because you have to go in there and replace that service line, the utility does not pay for that work,” he explained.

He continued, “And then they have to hire a contractor to go in there and install the service line for the upgraded service. We made a change last summer, effective in October, I believe. The utility used to provide that service to the property owners wherein they would pay the utility to perform that work. So there was a change where we no longer provide that work because it was not necessarily in line with our core services.”

The utility had been using maintenance crews to do that work, but Juarez said it decided “to focus on operation and maintenance … not necessarily coming in and making these improvements for private property owners.”

“Regardless of whether we did the work or they did the work, somebody has to upgrade that line,” he continued. Contractors say that costs between $20,000 to $25,000.

Juarez agreed that the price could be that high “in some cases.” He said the bulk of that cost is street repair, and regardless of who does the work, someone has to pay for it.

“We’re not saying by doing this it is affordable. We’re saying that this is work that has to be done regardless,” Juarez concluded.

Meszaros, however, argued that tenants could suffer if the owner of the primary residence failed to pay a water bill, causing the utility to cut off service to both residences. He also pointed out that the accessory dwelling unit might have to pay a higher bill because of volumetric billing. Two dwelling units will use more water than just one.

Additionally, Meszaros said that having submetering “could reduce the financial incentive to conserve water.”

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