BILL ANALYSIS
AB 2327
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2327 (Harkey)
As Amended June 21, 2010
Majority vote
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|ASSEMBLY: |63-0 |(May 28, 2010) |SENATE: |33-0 |(August 5, |
| | | | | |2010) |
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Original Committee Reference: INS.
SUMMARY : Authorizes affordable housing entities to join in an
arrangement that provides for the pooling of self-insured claims
or losses against tort liability, liability to officers and
employees for their acts or omissions, and physical damage to
motor vehicles, personal property, and real property of the
affordable housing entity.
The Senate amendments :
1)Require any insurance pool established pursuant to this bill
to furnish a copy of the pool's annual audited financial
statement and most recent actuarial review to the legislative
committees with housing and insurance policy jurisdiction.
2)Require the insurance pool to provide the legislative
committees with a brief description of any of the following
matters:
a) There has been a change to the pool's plan of financing,
management, or operation, including any material amendment
to any of those plans.
b) A claims audit report has been filed with any regulatory
body with respect to the pool.
c) A report of examination issued by any regulatory body
with respect to the pool has been received.
d) There has been a material change in the scope of the
regulation of the pool by other states in which the pool
operates.
EXISTING LAW :
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1)Authorizes local agencies to enter into a joint pooling
agreement to form a single statewide insurance pooling
arrangement for the payment of tort liability or public
liability losses incurred by those agencies. The agency is
known as the Local Agency Self-Insurance Authority.
2)Authorizes local public agencies to self-insure against
liability for injury resulting from an act or omission of
their employees in the scope of their employment.
3)Authorizes two or more local public entities, by a joint
powers agreement, to provide insurance through self-insurance,
or from an admitted insurer, or from a nonadmitted insurer
when obtained through a surplus lines broker.
4)Specifies that the pooling of self-insured claims or losses
among local public entities is not considered insurance and is
not subject to regulation by the Insurance Commissioner.
5)Authorizes two or more public agencies by agreement to jointly
exercise any power common to the contracting powers, even
though one or more of the contracting agencies are located
outside this state.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized an affordable housing entity to join one or more
other affordable housing entities in an arrangement providing
for the pooling of self-insured claims or losses with respect
to insurance covering tort liability, liability insurance for
employees and officers of the affordable housing entity
covering acts or omissions in the scope of employment, and
insurance covering losses from physical damage to motor
vehicles, personal property, real property, or other property
owned or operated by the affordable housing entity.
2)Defines the term "affordable housing entity" to include a
housing authority, a nonprofit corporation that is engaged in
providing affordable housing, a partnership or limited
liability company that is engaged in providing affordable
housing and that is affiliated with a housing authority or a
nonprofit corporation.
3)Authorizes any insurance pool established pursuant to this
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bill to be organized as a nonprofit corporation, limited
liability company, partnership, trust, or other form of
entity, whether organized under the laws of this state or
another state or operating in another state.
FISCAL EFFECT : Absorbable workload to the Assembly committees
on Insurance, on Housing and Community Development, the Senate
committees on Banking, Finance, and Insurance, and
Transportation and Housing to review the pool's annual audited
financial statements and the actuarial reviews.
COMMENTS :
1)The purpose of this bill is permit a wider variety of
affordable housing entities to join together in multi-state
joint self-insurance risk pools to help ensure that affordable
housing remains available to low income Californians.
2)According to the bill's sponsor, the Housing Authorities Risk
Retention Pool (HARRP), public housing authorities have the
ability to join together in multi-state joint self-insurance
risk pools to manage property and liability risks, jointly
purchase insurance or reinsurance, and to contract for risk
management, claims, and administrative services in order to
conserve scarce resources in these tough economic times.
HARRP is a California joint powers authority which operates as
a self-insurance pool comprised of 89 public housing
authorities from Oregon, Washington, California and Nevada.
The author and sponsor point out that significant changes are
occurring on a national basis with affordable housing.
Affordable housing is increasingly being developed by tax
credit limited partnerships, limited liability companies, and
nonprofit corporations. Public housing projects are being
transferred to these entities (a process called
"de-federalization") because of HUD's asset management
restrictions and the decrease in HUD capital funds and moneys
for operating subsidies.
The author and sponsor explain that when a tax-credit limited
partnership develops affordable housing, either a housing
authority or a nonprofit corporation acts as the general
partner, and institutional financing sources become the
limited partners. Nonprofit corporations have become more
active in the development of affordable housing because they
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have access to funding sources that may not be available to
public housing authorities.
3)According to the author and the sponsor, despite the
developments in the housing marketplace noted above, current
law does not allow nonprofit corporations, tax credit
partnerships, and tax credit limited liability companies to
benefit from participating in housing authority risk pools
because they are not public entities.
The author and sponsor state that this bill is consistent with
legislation enacted in Oregon and Washington in 2009. The
Oregon and Washington legislation permits housing authorities,
nonprofit corporations, and tax credit limited partnerships
and limited liability companies that are affiliated with a
housing authority or nonprofit corporation to form a joint
self-insurance pool that is not regulated as an insurance
company but does have the attributes of a public entity
insurance pool.
This bill creates new statutory requirements on affordable
housing entity insurance pools that would be similar to those
now required of public entity insurance pools (pursuant to
Government Code Section 6500 et seq.) and for nonprofit
corporation insurance pools (pursuant to Corporations Code
Section 5005.1). The governing board of the pool would be
required to set premium levels necessary to ensure financial
stability. The types of insurance coverage to be provided by
the affordable housing entity insurance pool is consistent
with the insurance coverage that can be provided by a public
entity or nonprofit corporation insurance pool.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0005611