BILL ANALYSIS Ó
AB 1105
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Date of Hearing: April 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1105 (Daly) - As Introduced February 27, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill repeals the January 1, 2016 sunset date for procedures
that counties and cities must follow to release subdivision
performance securities following the completion by developers of
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required public improvements associated with new developments.
FISCAL EFFECT:
Although the bill may contain reimbursable mandated local costs,
affected cities and counties have not filed a test claim for
reimbursement during the ten years in which the procedures
extended by this bill have been in effect.
COMMENTS:
1)Purpose. According to the author, "Without action the
timeframes and procedures for the release of performance
securities established via SB 1019 (Correa), Chapter 174,
Statutes of 2010 (and its predecessor, AB 1460 (Umberg)
Chapter 411, Statutes of 2005), will expire. SB 1019 and AB
1460 have provided 10 years of operating experience under the
established timeframes and procedures and it is now
appropriate to make permanent." This bill, sponsored by
California Building Industry Association, is intended to
retain the procedures negotiated between builders and local
agencies indefinitely.
2)Background. When a builder or developer builds a new
subdivision, he or she provides the local jurisdiction with an
improvement or performance bond to insure that the public
improvements, such as streets, traffic signals, and parks that
the developer provides are built to the city's or county's
specifications and standards. The bond amount is sufficient
to permit the construction to the specifications. The builder
pays a surety company/insurer a premium to obtain the bond.
When the work is completed, inspected and accepted by the
local jurisdiction, the public works director or the local
legislative body releases the bond.
AB 1460 (Umberg), established procedures and timeframes for
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the release of performance securities once homebuilders meet
city or county specifications by completing required public
improvements. AB 1460 represented a consensus approach, and
had the support of California's homebuilders and local
governments. The measure contained a January 1, 2011, sunset
clause in order to determine the effectiveness of the program.
SB 1019 (Correa), extended the sunset date for another five
years, until January 1, 2016.
Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081