BILL ANALYSIS                                                                                                                                                                                                    �






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: sb 401
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  Hueso
                                                         VERSION: 4/8/13
          Analysis by:  Mark Stivers                     FISCAL:  yes
          Hearing date:  April 30, 2013


          SUBJECT:

          Estimated costs and benefits of new building standards

          DESCRIPTION:

          This bill requires any state entity proposing amendments to  
          non-residential model building codes, and when requested for new  
          standards within the model codes, to estimate the cost of  
          compliance and the potential benefits of the new standard as  
          well as disclose the assumptions used to determine the  
          estimates.

          ANALYSIS:

          The California Building Standards Law establishes the California  
          Building Standards Commission (BSC) and the process for adopting  
          state building standards.  Under this process, state agencies  
          propose building standards for building types under their  
          jurisdiction.  For example, the Department of Housing and  
          Community Development (HCD) is the relevant state agency for  
          residential building standards.  The Office of Statewide Health  
          Planning and Development is responsible for hospitals and  
          clinics, and the Division of the State Architect is the relevant  
          agency for schools and emergency service buildings.  In  
          addition, the California Energy Commission develops building  
          standards relating to energy efficiency for all occupancies.  

          State agencies begin with a model code developed by a national  
          code-writing entity.  They then propose amendments to the model  
          codes to reflect California needs and priorities and submit to  
          the BSC the amended model codes.  The BSC must then adopt,  
          modify, or reject the proposed building standards.  

          Building standards qualify as regulations.  Therefore, the  
          adoption of building standards is subject to the Administrative  
          Procedures Act (APA), which establishes the general process for  
          the adoption of regulations.  As part of the APA, an entity  
          proposing new or amended regulations must prepare and submit to  




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          the Office of Administrative Law (OAL) a notice of the proposed  
          action and an initial statement of reasons (ISOR) for proposing  
          the change in regulation.  Among other things, the ISOR must  
          include a statement of the specific purpose for each change, the  
          problem the agency intends to address, and the rationale for why  
          the change is reasonably necessary to carry out the purpose and  
          address the problem for which it is proposed.  The ISOR must  
          also enumerate the benefits anticipated from the regulatory  
          action, both monetary and non-monetary, and include evidence to  
          support an initial determination that the change may have or  
          will not have a significant, statewide adverse impact directly  
          affecting business.  

          The notice of proposed action that accompanies the ISOR must  
          include, among other things, a statement of whether or not the  
          changes would have a significant effect on housing costs and,  
          separately, a description of all cost impacts known to the  
          agency that a representative private person or business would  
          necessarily incur in reasonable compliance with the proposed  
          action.  If the agency is unaware of cost impacts on private  
          persons or businesses, it may state that instead.  

          AB 1612 (Lara), Chapter 471, Statutes of 2012 requires the ISOR  
          for any California amendment to a model building code that  
          impacts housing to include the estimated cost of compliance, the  
          estimated potential benefits, and the related assumptions used  
          to determine the estimates.  For changes in the model codes  
          themselves, AB 1612 requires the ISOR to include the estimated  
          cost of compliance, the estimated potential benefits, and the  
          related assumptions used to determine the estimates for that  
          specific change only if an interested party has made a request  
          to the agency to examine that specific section.  No longer may a  
          state agency developing building standards that relate to  
          housing state that changes to the standards do not have a  
          significant effect on housing costs without publicly  
          substantiating that determination with cost data. 

           This bill  applies the AB 1612 ISOR rules to any building  
          standard, not just a building standard that impacts housing.   
          The bill requires any state entity proposing building codes to  
          include in the ISOR the estimated cost of compliance, the  
          estimated potential benefits, and the related assumptions used  
          to determine the estimates for any California amendment to a  
          model building code.  In addition, a state entity must include  
          in the ISOR the estimated cost of compliance, the estimated  
          potential benefits, and the related assumptions used to  




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          determine the estimates for any change in the model codes  
          themselves if an interested party has made a request to the  
          agency to examine that specific section.
          
          COMMENTS:

           1.Purpose of the bill  .  According to the author, it is critical  
            to consider the impacts of changes in state building standards  
            on all businesses, not just on the residential construction  
            industry.  If an agency is able to make the determination that  
            a new standard will have no significant impact on business, it  
            should know what the proposed standard will cost.  This bill  
            creates parity between residential and non-residential  
            building standards.

           2.Just state amendments and requested portions of model codes  .   
            When national code-writing entities issue new model codes,  
            they often include numerous changes from the previous edition.  
             Last year, HCD estimated that there were 1500 such changes  
            affecting housing in the newest model codes.  Non-residential  
            model codes see similar numbers of changes.  California  
            amendments to the model codes, however, are much less  
            frequent.  In recognition of the potential workload associated  
            with having to provide cost and benefit information on every  
            change to building standards, this bill limits the requirement  
            for an agency to provide cost and benefit information just to  
            California amendments and to those changes within model codes  
            that an interested party requests information on.
          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 24,  
          2013.)

               SUPPORT:  California Building Industry Association
                         California Business Properties Association

               OPPOSED:  None received.