BILL ANALYSIS Ó
AB 1429
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1429 (Chiu) - As Amended April 20, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes a grant program for the seismic retrofit
of multi-family (five to ten unit) structures with low-income
tenants in high-risk earthquake areas.
AB 1429
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FISCAL EFFECT:
1)The creation of the program in statute, by itself, does not
have state costs, as the program would only be operational if
the Legislature appropriates funds. The California Earthquake
Authority (CEA) is privately funded. The current
CEA-supported EBB grant program is funded by a portion of CEA
investment income. The CEA insures only residential housing
with one to four units, and the CEA-supported EBB grant
program is further limited to qualifying single-family,
detached residential buildings (which may be of one to four
dwelling units).
2)Although there are no direct state costs, creation of the
program, coupled with legislative findings, imply the
availability of state funding for the program. The bill's
findings state, "There are many paths to funding a retrofit
program, including income tax credits, sales tax rebates,
attaching the financing to property taxes, and grants.
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." State tax credits and/or rebates would result
in a reduction in state GF revenues.
The Earthquake Brace + Bolt (EBB) program provides homeowners
up to $3,000 for qualifying single-family, detached
residential buildings (which may be of one to four dwelling
units). The size and scope of the hypothetical grant program
is unknown, but would need to be in the millions of dollars to
make much impact. For example, $7.5 million could fund 1,500
$5,000 grants. But the aggregate cost of retrofitting larger
buildings would likely exceed $10,000 per unit.
AB 1429
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COMMENTS:
1)Purpose. California has an existing seismic mitigation
incentive program called Earthquake Brace + Bolt (EBB), which
is administered by the California Residential Mitigation
Program (CRMP), but it is limited to only 650 homes in the Bay
Area, Los Angeles County and Napa. The goal of this
legislation is to expand on Brace + Bolt and create a
statewide earthquake retrofit program to cover the tens of
thousands of small multi-family residential structures that
need retrofitting. This bill is sponsored by the California
Department of Insurance.
2)California Earthquake Authority. The CEA was formed through
legislation in 1996 to address an insurance-availability
crisis that followed the 1994 Northridge earthquake. The CEA
is a privately funded, publicly managed not-for-profit
organization that provides catastrophic residential earthquake
insurance. The Governor, State Treasurer, and Insurance
Commissioner serve as the CEA's governing board voting
members. CEA has about 75% of the market for earthquake
insurance in California, and is funded through sales of
earthquake policies, and investments.
3)Earthquake Brace + Bolt. The EBB program was created by the
California Residential Mitigation Program (CRMP), which is a
joint powers authority between the CEA and the Office of
Emergency Services. The EBB was developed to help homeowners
lessen the potential for damage to their houses during an
earthquake. A residential seismic retrofit strengthens an
existing house by bolting the house to its foundation and
adding bracing around the perimeter of the crawl space. CRMP
is funded through a portion of CEA's investment income; CEA
provided about $2 million in mitigation funding for the EBB
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program in 2014.
The bill would require the existing JPA to develop the program
requirements for small, multi-family residential structures
along the lines of the existing EBB program.
4)Related Legislation. AB 1440 (Nazarian), also on today's
agenda, is nearly identical to this bill, but establishes a
statutory structure for seismic retrofit grant program for
individual homeowners instead of multiunit houses.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081