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  








                                                                    AB 1429


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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