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