BILL ANALYSIS
AB 43
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 43 (Blakeslee)
As Amended June 25, 2009
Majority vote
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|ASSEMBLY: |78-0 |(May 28,2009) |SENATE: |30-6 |(September 3, |
| | | | | |2009) |
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Original Committee Reference: INS.
SUMMARY : Authorizes the California Earthquake Authority (CEA)
to employ a chief mitigation officer and removes the restriction
that the CEA hire no more than 25 civil service employees.
The Senate amendments , modify the Assembly version of the bill
as follows:
1)Require the governing board of the CEA to establish and direct
the duties of the chief mitigation officer to create and
maintain all of the following:
a) Program activities that mitigate against seismic risk,
for the benefit of homeowners, other property owners,
including landlords with smaller holdings, and the general
public;
b) Collaboration with academic institutions, nonprofit
entities, and commercial businesses in joint efforts of
research, education, and programs to reduce seismic risks;
c) Programs to provide financial assistance in the form of
loans, grants, credits, rebates, or other financial
incentives to reduce seismic risks, including structural
and contents retrofitting of residential structures;
d) Collaborations and joint programs with subdivisions and
programs of local, state, and federal governments; and,
e) Other programs and activities deemed appropriate by the
governing board to further the CEA's mitigation goals.
2)Require the chief mitigation officer to file financial
disclosure statements with the Fair Political Practices
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Commission.
EXISTING LAW :
1)Establishes the CEA with the authority to sell policies of
basic residential earthquake insurance. The CEA is a publicly
managed, largely privately funded entity. Companies that sell
residential insurance can choose to offer their own privately
funded earthquake insurance product or they can become a
participating insurance company of the CEA. Only
participating insurance companies can offer CEA
earthquake-insurance policies.
2)Authorizes the CEA to contract for the services of a chief
executive officer, a chief financial officer, and an
operations manager, as well as to contract for the services of
reinsurance intermediaries, financial market underwriters,
modeling firms, a computer firm, an actuary, an insurance
claims consultant, counsel, and private money managers. These
contracts are not subject to civil service provisions of law.
3)Specifies that the other employees of the CEA shall be subject
to civil service provisions. The total number of CEA
employees subject to civil service provisions shall not exceed
25.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized the CEA to contract for the services of a chief
mitigation officer, who would not work in a civil service
position.
2)Required the chief mitigation officer for the CEA to establish
programs to mitigate against seismic risk by developing
programs to reach out to homeowners, companies, corporations,
landlords with small property holdings, and the general
public, providing loans and grants, forming partnerships with
local, state, and federal governments and private entities,
and utilizing other programs deemed necessary by the chief
mitigation officer that are consistent with existing law.
3)Eliminated the provision of law that specifies that the CEA
may employ no more than 25 civil service employees.
FISCAL EFFECT : According to the Senate Appropriations
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Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)According to the author, the Working Group on California
Earthquake Probabilities, a multi-disciplinary group of
scientists and engineers from the U.S. Geological Survey and
the Southern California Earthquake Center, forecasts a 99%
chance of a magnitude 6.7 or greater earthquake striking
California within the next 30 years. It is estimated that if
the earthquake's epicenter is in a highly populated area such
as Los Angeles, the damage could be in the billions in
residential and business losses. The author also states that
in San Francisco, 80% of the weakest wood-framed buildings are
expected to collapse or become damaged beyond repair in a
large earthquake.
2)The CEA maintains an existing fund, known as the Loss
Mitigation Fund, to create a statewide residential retrofit
program to benefit the public as well as CEA policyholders.
This fund has approximately $12 million. However, previous
programs started by the CEA to retrofit residential property
have not been successful. An early effort resulted in a few
retrofits and one loan. Another effort, the State Assistance
for Earthquake Retrofitting (SAFER) Program, established in
several San Francisco Bay Area counties, received 17,000 phone
inquiries, and performed 4,772 assessments, but resulted in
only 31 consumers undertaking retrofit activities. The author
states that this bill will make it possible for the CEA to
employ a chief mitigation officer and establish a successful
retrofit program.
3)The bill removes the employment cap of 25 civil service
employees in the CEA. The bill leaves intact the existing cap
on the operating expenses of the CEA: at 3% of the premium
income received by the CEA. Thus, while the staffing level
may increase in future years if the Legislature and Governor
approve new positions, AB 43 will not increase operating costs
above the existing authorized level.
4)With the very high probability of a major earthquake striking
California within the foreseeable future, there is a strong
argument that the state needs to do more to provide incentives
to homeowners to make the investments necessary to reduce the
threats to lives and property. Since the state is in the
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middle of a deep economic recession, it is likely that without
a public partnership of new funds for homeowners that many
people will not correct the hazards. This bill contains
several elements that can help change behavior to reduce
structural hazards, including information, grants and loans to
retrofit structures.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0001786