BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 184| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 184 Author: Swanson (D) Amended: As introduced Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 5/18/11 AYES: Wolk, Huff, DeSaulnier, Hancock, Hernandez, Kehoe, Liu NO VOTE RECORDED: Fuller, La Malfa ASSEMBLY FLOOR : 49-10, 4/14/11 - See last page for vote SUBJECT : Contractual assessment programs: seismic safety improvements SOURCE : City of Oakland DIGEST : This bill adds seismic strengthening improvements to the types of improvements to private property that can be financed with voluntary contractual assessments. ANALYSIS : A benefit assessment is an involuntary charge that property owners pay for a public improvement or service that provides a special benefit to their property. The amount of the assessment must be directly related to the amount of the benefit that the property receives. Benefit assessments can finance public projects like flood control, street improvement, streetlights, and public landscaping. CONTINUED AB 184 Page 2 As an alternative to benefit assessments, and only with the free and willing consent of affected property owners, public agencies can use "voluntary contractual assessments" to finance: 1. Public improvements to developed parcels (SB 837 ÝMcQuorquodale], Chapter 1388, Statutes of 1987). 2. Renewable energy sources or energy efficiency improvements that are permanently fixed to real property (AB 811 ÝLevine], Chapter 159, Statutes of 2008). 3. Water efficiency improvements that are permanently fixed to real property (AB 474 ÝBlumenfield], Chapter 444, Statutes of 2009). 4. Electric vehicle charging infrastructure (SB 1340 ÝKehoe], Chapter 649, Statutes of 2010). To use voluntary contractual assessments, a public agency's legislative body must adopt a resolution, which: 1. Determines that it would be convenient, advantageous, and in the public interest to designate an area within which officials and property owners may enter into contractual assessments and make related financing arrangements. 2. Identifies the kinds of public works which may be financed. 3. Describes the area where contractual assessments may be used. 4. Describes the proposed financing arrangements, including criteria for determining the creditworthiness of a property owner. 5. States the time and place for a public hearing. 6. Directs an official to prepare a detailed report about the contractual assessment program and consult with the county auditor and county controller regarding fees. CONTINUED AB 184 Page 3 The report on the proposed assessment program must contain: 1. A map of the area where contractual assessments will be offered. 2. A draft contract specifying the terms and conditions. 3. A list of the types of facilities and improvements which may be financed. 4. The official authorized to enter into contractual assessments on behalf of the county or city. 5. The maximum aggregate dollar amount of contractual assessments. 6. A method for prioritizing requests from property owners for financing. 7. A plan for raising a capital amount required to pay for work performed pursuant to contractual assessments. 8. Information about the county auditor's and county controller's fees. The legislative body must give written notice to all water or electricity providers within a proposed area where voluntary contractual assessments will be offered. After holding a public hearing, the legislative body may adopt a resolution confirming the program as detailed in the report, may confirm a modified version of the report, or may abandon the proceedings. The legislative body must designate an office to: 1. Prepare the annual roll of assessment obligations on property subject to a voluntary contractual assessment. 2. Establish procedures for responding to inquiries concerning estimated voluntary contractual assessment liabilities. CONTINUED AB 184 Page 4 The legislative body must provide for documents to be recorded with the county recorder, providing notice of a contractual assessment on real property. A property owner may not participate in a contractual assessment program if the owner's participation would result in the total amount of any annual property taxes and assessments exceeding five percent of the property's market value, as determined at the time of approval of the owner's contractual assessment. This bill: 1. Authorizes the use of contractual assessments to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property. 2. Specifies that, for financing the installation of seismic strengthening improvements, "public agency" means a city, county, or city and county. 3. Requires that a resolution of intention adopted by the legislative body of a public agency to establish a voluntary contractual assessment program relating to seismic strengthening improvements must identify the kinds of seismic strengthening improvements that may be financed. This bill requires the resolution of intention to direct an appropriate public agency official to prepare a report on the proposed assessment program and requires that report to identify the types of seismic strengthening improvements that may be financed through the use of contractual assessments. 4. Authorizes, upon written consent of an authorized public agency official, the proposed seismic strengthening financing program to allow a property owner to purchase seismic strengthening-related equipment and materials directly and to contract directly for the installation of seismic strengthening improvements. This bill contains legislative findings and declarations regarding the need to finance seismic strengthening improvements using contractual assessments. Comments CONTINUED AB 184 Page 5 This bill builds upon a substantial body of state law that lets local officials use public financing to help private property owners pay for seismic improvements. Unreinforced masonry buildings and "soft story" buildings with large open spaces on the ground floor are serious earthquake hazards. The Association of Bay Area Governments says that 26,000 of Oakland's 163,000 housing units will become uninhabitable when the Hayward Fault has a major earthquake. Because commercial loans for earthquake improvements can be expensive, local officials want to accelerate retrofit work on vulnerable buildings by loaning money to private property owners at below-market rates. This bill provides local officials with another tool to help property owners pay for structural upgrades that save lives, protect rescue workers, and reduce economic disruption after a major earthquake. Prior Legislation This bill replicates AB 1755 (Swanson), Session of 2009-10. Governor Schwarzenegger vetoed that bill, stating that he did not support expanding contractual assessment programs to include seismic improvements. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/19/11) City of Oakland (source) American Federation of State, County and Municipal Employees Apartment Association - California Southern Cities California Apartment Association California's Assessors Association California Association of Realtors Oakland Mayor Jean Quan ASSEMBLY FLOOR : 49-10, 4/14/11 AYES: Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Charles Calderon, Campos, CONTINUED AB 184 Page 6 Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong, Fuentes, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Mitchell, Monning, Nestande, Pan, Perea, V. Manuel Pérez, Portantino, Skinner, Smyth, Solorio, Swanson, Torres, Wieckowski, Yamada, John A. Pérez NOES: Achadjian, Bill Berryhill, Donnelly, Hagman, Halderman, Mansoor, Miller, Nielsen, Norby, Silva NO VOTE RECORDED: Alejo, Allen, Butler, Conway, Cook, Furutani, Galgiani, Garrick, Gorell, Grove, Harkey, Jones, Knight, Logue, Mendoza, Morrell, Olsen, Valadao, Wagner, Williams, Vacancy AGB:kc 5/19/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED