BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Tom Torlakson, Chairman 1617 (Kehoe) Hearing Date: 5/5/08 Amended: 4/24/08 Consultant: Miriam Barcellona IngenitoPolicy Vote: NR&W 5-2 ; Rev&Tax 5-3 _________________________________________________________________ ____ BILL SUMMARY: SB 1617 would require (1) the Board of Forestry and Fire Protection (BOF) to establish a benefit fee for fire protection and prevention and other related emergency services that are attributable to the presence of structures within a state responsibility area (SRA); (2) the Department of Forestry and Fire Protection (CDFFP) to inspect structures in the SRA and determine the structure specific fee; (3) the county auditors to collect the benefit fee; and (4) establish and appeal process. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2008-09 2009-10 2010-11 Fund Emergency regulations $1,120 General Parcel mapping $315 $630 $630 General/ Special* Inspections unknown, potentially in excess of $50,000General/ Special* Collection costs unknown, potentially millions Special* Appeals process unknown, potentially millions Special* Fee revenue (unknown, potentially millions starting in Special* (2010-11) _______________ *State Responsibility Area fire Protection and Prevention Fund, established in this bill. _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense file. Background and existing law Under existing law, CDFFP is required to provide fire protection on lands that are deemed to be in the "state responsibility area" (SRA). SRAs are generally lands that are (or were, prior to development) largely covered by trees, brush, and grass and other undeveloped lands. SRAs cannot include federal owned or controlled land, or land within a city. Existing law requires CDFFP to provide wildland fire prevention and firefighting personnel and equipment. Existing law authorizes CDFFP to provide rescue, first aid, and other emergency services to the public in the SRA if the activity does not require additional Page 3 SB 1617 (Kehoe) funds. According to the Legislative Analyst's Office, in its Analysis of the 2008-2009 Budget Bill, "Over the last several decades, the state has experienced significant housing development at the boundary between wildlands and urban areas, known as the wildland urban interface. In particular, significant development has occurred in the Sierra Nevada foothills and the interior ranges of Southern California?. [W]hile the total acreage in SRA has remained stable over the last 15 years, the number of housing units in SRA has increased by 15 percent over this period-despite changes in SRA designations which have moved fire protection responsibility for significant numbers of houses from SRA to local responsibility areas. As development increases in previously undeveloped-and often fire prone-areas, fire protection costs increase for several reasons. First, the presence of more people increases the incidence of wildland fires, as fires from human-caused activities spread to wildland areas. Second, protecting people and homes often requires greater fire suppression effort than would typically be used on forests or rangelands. Finally, the presence of people and structures can sometimes limit the techniques used for fire prevention or suppression. For example, the use of prescribed burning to reduce available fuel loads or the use of aircraft to suppress fires may be limited by the presence of homes in a formerly wildland area. The inability to use these kinds of fire suppression tactics increases the need for more labor-intensive firefighting methods to protect people and homes." According to a report found on the department's Internet Web site, people cause over 95 percent of the fires in the SRA. The total number of structures in the SRA is unknown. According to the Legislative Analyst's Office, as of 2005 there were in excess of 850,000 residences in the SRA. For the purposes of this analysis, staff assumes that for every ten residential structures there is a non-residential structure (85,000). Additionally, the number of structures in the SRA that are sufficiently covered by a structural fire department is unknown. For the purposes of this analysis, staff assumes that 75 percent of structures in the SRA have sufficient structural fire protection provided by a non-CDFFP entity. Regulations and establishment of fee SB 1617 would require BOF to adopt emergency regulations to establish a benefit fee to be charged to any owner of a Page 4 SB 1617 (Kehoe) structure within a state responsibility area. BOF would be required to establish the fee in consultation with CDFFP, including the Office of the State Fire Marshall (SFM). The fee would begin to be collected in fiscal year 2010-11. SB 1617 specifies that the fee shall be established based on the fire hazard severity zone level, proximity to fire stations and other criteria that may be determined by BOF, with respect to where the structure is located. The fee shall also be set in an amount sufficient to reimburse each county's actual and reasonable costs for levying and collecting the benefit fee consistent with a cost recovery agreement entered into by the department and each county. SB 1617 would require that the base benefit fee be updated at least every two years. SB 1617 also provides that BOF must include criteria by which an owner of a structure can qualify to receive a reduction in the base benefit fee by meeting guidelines that reduce the structure's potential fire risk. Compliance with the criteria is determined by CDFFP, after an inspection. SB 1617 specifies items (such as compliance with defensible space requirements or using building materials that are fire resistant) that BOF must consider when establishing the benefit fee reduction criteria, but authorizes BOF to include other items as well. SB 1617 would prohibit the fee from being reduced to below $100, except if the structure in question is sufficiently protected by a county, special district or volunteer fire department directly or through a contract. SB 1617 would authorize a local agency to request a review of sufficiency of their structural fire protection at any time, and the board shall review the request at its next regularly scheduled meeting. If a local agency requests more than one review in any given year, the board is authorized to charge a review fee. CDFFP estimates it would require six new positions at the board to develop the regulations and fee, and additional costs of about $250,000 for board hearings. Costs to BOF to adopt the fee and corresponding regulations would be about $1.1 million. CDFFP estimates another $630,000 for development and maintenance of parcel maps to be used in inspections and charging the fee to structural owners. Inspections and charging the individual fee CDFFP estimates it would require 250 to 600 field inspectors to Page 5 SB 1617 (Kehoe) conduct the inspections that would qualify owners for a reduction in the benefit fee. CDFFP estimates it would also need additional staff to contact all 56 of the counties that are within the SRA; work with county representatives, including assessors and fire officials in order to develop underlying data needed to assess the fee; various other support positions to develop the inspection program. Costs associated with staff for the inspection program could be in excess of $37 million Additionally, CDFFP estimates it would require 377 new vehicles, of which 356 would be equipped with a GPS vehicle computer. The department's estimated cost for these items is $12.1 million. SB 1617 would require CDFFP to provide the county auditor, by August 10 each year, with the appropriate benefit fee to be included as a direct charge in the annual secured property tax bill. CDFFP would be required to provide a telephone number to be included with the direct charge. Collection of fee and deposit of fee into fund SB 1617 would require local governments to collect the benefit fee at the same time and manner as secured property tax bills. SB 1617 would require that the fee be collected starting with the 2010-11 fiscal year. The Legislative Analyst's Office estimates that the costs to counties to collect the fee would be about 5 to 10 percent of the revenues generated. The county collecting the benefit fees would be authorized to retain the portion of the benefit fee authorized by the BOF to cover the actual and reasonable costs associated with the collection of this benefit fee. The county auditor would be required to remit the fee revenues to the State Treasurer for deposit into the State Responsibility Area Fire Protection and Prevention Fund, established in the bill. The amount of revenues that would be generated by the fee are unknown because the number of structures is unknown, the number of fire departments that provide sufficient structural fire protection in the SRA is unknown, the amount of reductions in the fee due to owners reducing fire risk is unknown, and the ultimate level the fee is set is unknown. However, if there were 935,000 structures in the SRA and about 150,000 of those with no structural fire protection being provided, the minimum Page 6 SB 1617 (Kehoe) fee of $100 would generate $15 million dollars. Appeals Process SB 1617 establishes a two-level appeal process. SB 1617 would authorize a person from whom the benefit fee is determined to be due to petition, in writing, for a re-determination of that benefit fee within 30 days after receipt of the secured property tax bill. The petition would be sent to both CDFFP and BOF. The notice of the determination by CDFFP would be required to be served to both the BOF and the petitioner on the same date. Within 30 days of being served with the notice of determination by CDFFP, a second appeal may be filed with the BOF. The BOF would be required to grant the petitioner an oral hearing. All benefit fees determined to be due by the BOF are due at the time they become final. If not paid when due, a penalty of 10 percent shall be added to the amount due and payable. CDFFP did not provide a separate estimate for these provisions; costs would be significant, potentially in the millions. State Responsibility Area Fire Protection and Prevention Fund SB 1617 establishes the State Responsibility Area Fire Protection and Prevention Fund in the State Treasury. Monies in the fund would be available upon appropriation by the Legislature for structural fire protection and prevention and other emergency services that are attributable to the presence of structures in SRAs, which services benefit owners of structures in those SRAs, and for administration of this chapter. At least 50 percent of the moneys appropriated from the fund would be required to be allocated for fire prevention activities. Staff recommends amending the bill to specify that the monies in the fund are available to the department upon appropriation by the Legislature. Other comments CDFFP's statutory purpose is to protect wildlands. It is not a structural fire department. SB 1617 may inadvertently create a structural fire department in CDFFP. Staff recommends that the legislative findings and declarations be amended to clarify that the state only provides this protection when no other entity can; when a local agency or special district is able to provide that service, CDFFP will cease providing that service. Additionally, staff recommends authorizing and giving priority to the use of the fee revenues to help local agencies become Page 7 SB 1617 (Kehoe) self-sufficient. Staff notes that CDFFP provided an estimate higher than the one reflected in this analysis.