Amended in Assembly April 20, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1429

Introduced by Assembly Member Chiu

(Coauthor: Assembly Member Nazarian)

February 27, 2015

An act to add Section 10089.397 to the Insurance Code, relating to earthquake loss mitigation.

LEGISLATIVE COUNSEL’S DIGEST

AB 1429, as amended, Chiu. Earthquake loss mitigation: grant programs.

Existing law, the California Earthquake Authority Act, establishes the California Earthquake Authority begin insert , administered by the Insurance Commissioner, end insert and authorizes the authority to transact insurance in this state as necessary to, among other things, create and maintain, in collaboration or jointly with subdivisions and programs of local, state, and federal governments and with other national programs, programs and activities that mitigate begin delete against end delete seismic risks, for the benefit of homeowners and other property owners. Existing law establishes the Earthquake Loss Mitigation Fund, a subaccount of the California Earthquake Authority Fund, a continuously appropriated fund. Existing law authorizes the authority to apply money in the Earthquake Loss Mitigation Fund to supply grants and loans or loan guarantees to dwelling owners who wish to retrofit their homes to protect against earthquake damage, as specified.

This bill would begin delete require the authority to establish a grant program, administered by a joint powers authority of the authority and the Office of Emergency Services, that would give a grant to a qualifying applicant who owns end delete begin insert recognize the existence of the California Residential Mitigation Program (CRMP), a joint powers authority created in 2012 by agreement between the California Earthquake Authority and the Office of Emergency Services. The bill would require the CRMP to implement a grant program and, on or after July 1, 2017, authorize it to give a grant to a qualifying owner of end insert a residential structure that contains between 5 and 10 dwelling units begin delete for the purpose of paying a portion of the end delete begin insert to defray the owner’s end insert cost of seismic retrofit work to the structure, as begin delete specified. end delete begin insert specified, if the Legislature appropriates funds for that purpose. end insert This bill would require begin delete the authority and the office to jointly adopt regulations end delete begin insert the governing board of the CRMP, after providing notice and opportunity for public review and comment, to adopt policies and procedures end insert necessary to implement the grant program, to establish eligibility criteria for participation in the grant program, and to establish criteria for determining the amount of a grant awarded under the grant program. begin delete This bill would provide that money in the Earthquake Loss Mitigation Fund may be expended to implement the grant program and make grants under the program upon appropriation by the Legislature. end delete This bill would make related findings and declarations.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) The earthquakes of 2014 that affected the Cities of La Habra
and Napa have generated increased interest in mitigating begin insert the
damage to end insert single-family homes begin delete against earthquake damage. end delete begin insert from
earthquakes. end insert

(2) The California Earthquake Authority and the Office of
Emergency Services plan to expand the Earthquake Brace + Bolt
program to 650 homes in 2015.

(3) The California Earthquake Authority is working with the
Federal Emergency Management Agency and the Applied
Technology Council, a nonprofit research organization, to develop
the “ATC-110. Development of a Prestandard for the Evaluation
and Retrofit of One and Two Family Light Frame Residential
Buildings” for retrofitting additional types of single-family homes.

(4) A well-funded program to encourage homeowners to mitigate
begin insert risks to end insert their homes would mean more homes would survive an
earthquake and homeowners who retrofit their homes would receive
actuarially justified lower rates for earthquake insurance.

(5) Only 12 percent of California homeowners currently
purchase earthquake insurance, leaving the vast majority of
homeowners unprotected in the event of a major earthquake.

(6) There are many paths to funding a retrofit program, including
income tax credits, sales tax rebates, attaching the financing to
property taxes, and grants.

(b) Therefore, it is the intent of the Legislature to enact
legislation that would create and fund a program to assist California
homeowners with earthquake mitigation repairs to their homes.

SEC. 2.  

Section 10089.397 is added to the Insurance Code, immediately following Section 10089.39, to read:

begin delete

10089.397.  

(a) On or before July 1, 2016, the authority shall
establish a grant program that is administered by a joint powers
authority of the authority and the Office of Emergency Services
for the purpose of providing monetary grants that assist a qualified
owner of a multi-unit residential structure, whose tenants cannot
afford a rent increase to finance seismic retrofit expenses passed
on by the owner, by defraying the owner’s cost of seismic
retrofitting of the structure.

end delete

begin insert

begin insert 10089.397. end insert   

end insert begin insert

(a) The Legislature finds and declares that there
exists the California Residential Mitigation Program, also known
as the “CRMP,” a joint powers authority created in 2012 by
agreement between the California Earthquake Authority and the
Office of Emergency Services.

end insert begin insert

(b) If the Legislature appropriates funds for the purpose of
funding the CRMP’s implementation of the grant program
described in this section, the CRMP shall, pursuant to the
requirements of this section, implement the grant program and,
on and after July 1, 2017, make grants that assist a qualifying
owner of a multiunit residential structure by defraying the owner’s
cost of seismic retrofitting of the structure.

end insert begin delete

(b) An

end delete

begin insert (c) end insert begin insert   end insert begin insert The CRMP may make a grant to an end insert applicant who satisfies
all of the begin delete following may seek a grant from the program established
by this section: end delete begin insert following: end insert

(1) The applicant is an owner of record of the structure to be
begin delete retrofitted. end delete begin insert retrofitted and has secured the written consent of all
other owners of the structure to make a grant application. end insert

(2) The structure is a residential building of not begin delete less end delete begin insert fewer end insert than
five, but not more than begin delete 10 end delete begin insert 10, end insert dwelling units.

(3) The dwelling units in the structure are occupied by tenants
who are members of “lower income households,” as defined in
subdivision (a) of Section 50079.5 of the Health and Safety Code.

(4) The structure meets structural requirements established
pursuant to subdivision begin delete (c). end delete begin insert (d). end insert

(5) The structure is located in a high-risk earthquake area, based
on criteria established pursuant to subdivision begin delete (c). end delete begin insert (d). end insert

(6) The retrofit work qualifies as work for which the applicant
may receive a grant, based on criteria established pursuant to
subdivision begin delete (c). end delete begin insert (d). end insert

begin delete

(c) The authority shall, jointly with the Office of Emergency
Services, adopt regulations

end delete

begin insert (d) end insert begin insert   end insert begin insert The governing board of the CRMP shall adopt policies and
procedures end insert necessary to implement this section, including, but not
limited to, begin insert establishing the means by which the applicant may
satisfy the tenant-related economic eligibility criteria for the
program, end insert establishing structural eligibility requirements for a
structure that will receive seismic retrofit work, defining criteria
for determining whether a structure is located in a high-risk
earthquake area, defining criteria for seismic retrofit work that
qualifies as work eligible for receipt of a grant, and defining criteria
for the determination of the amount of a grant awarded pursuant
to the program created by this section. begin insert In adopting those policies
and procedures, the governing board shall provide notice and
opportunity for public review and comment, publish the policies
and procedures on the CRMP’s Internet Web site, and otherwise
make the policies and procedures available to the public. end insert

begin delete

(d) The authority may expend money in the Earthquake Loss
Mitigation Fund, upon appropriation by the Legislature, to
implement and make grants pursuant to the program established
by this section.

end delete