BILL ANALYSIS Ó
AB 1429
Page 1
ASSEMBLY THIRD READING
AB
1429 (Chiu)
As Amended April 20, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
|----------------+------+---------------------+---------------------|
|Insurance |12-0 |Daly, Beth Gaines, | |
| | |Calderon, Cooley, | |
| | |Cooper, Dababneh, | |
| | |Frazier, Gatto, | |
| | |Gonzalez, Grove, | |
| | |Mayes, Rodriguez | |
| | | | |
|----------------+------+---------------------+---------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, | |
| | |Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 1429
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SUMMARY: Establishes a grant program for the seismic retrofit of
multi-family structures with low-income tenants. Specifically,
this bill:
1)Requires the California Earthquake Authority (CEA) to form a
joint powers authority (JPA) with the Office of Emergency
Services (OES) to develop a seismic retrofit grant program for
multi-family housing.
2)Limits grant funding from this program to structures that meet
the following requirements:
a) The structure has five to 10 dwelling units.
b) The tenants are all low-income.
c) The structure meets eligibility requirements that will be
established by the JPA.
3)Requires the JPA to adopt regulations defining the type and
location of structures eligible for grant funding.
4)Requires the JPA to adopt regulations to establish the criteria
for determining grant amounts and commence operations July 1,
2017.
5)Makes findings and declarations regarding earthquake mitigation
efforts and the need for residential seismic retrofit programs.
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EXISTING LAW:
1)Establishes the CEA as a publicly managed insurer to provide
residential earthquake insurance.
2)Defines residential earthquake insurance as a policy protecting
a residence with four or fewer dwelling units.
3)Requires OES to perform a variety of duties with respect to
specified emergency preparedness, mitigation, and response
activities in the state, including emergency medical services.
4)Establishes the Earthquake Loss Mitigation Fund (mitigation
fund) as a sub-account with the CEA Fund and directs the fund to
transfer 5% of its investment earnings into the fund each year.
This fund is available to pay for research and mitigation
programs undertaken by the CEA.
5)Allows public agencies to form JPAs for the exercise of shared
powers.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
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 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)
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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.
COMMENTS:
1)Purpose. The author states that he (as the former president of
the San Francisco Board of Supervisors) helped lead the city's
efforts to prepare for and mitigate the damage from earthquakes.
However, only 12% of California homeowners have earthquake
insurance, and there are between 1.2 million to 1.6 million
pre-1940s homes with so called "cripple walls," and homes on
hillsides, and those with living space over garages that are at
serious risk in even a minor quake, let alone a major one.
California has an existing seismic mitigation incentive program
called Earthquake Brace + Bolt (EBB), which is administered by
the California Residential Mitigation Program, 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.
2)Brace + Bolt. The EBB program was created by the California
Residential Mitigation Program, which is a joint power authority
between the CEA and the OES. 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, making it more resistant to
earthquake activity such as ground shaking and soil failure, by
bolting the house to its foundation and adding bracing around
the perimeter of the crawl space. The EBB program provides
homeowners up to $3,000 to strengthen their foundation and
lessen the potential for earthquake damage. A typical retrofit
may cost between $2,000 and $10,000 depending upon the location,
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the size of the house, and the amount of work involved. This
bill would require the JPA to develop the program requirements
for small, multi-family residential structures along the lines
of the existing EBB program, but the requirements for these
larger structures are significantly different and more costly
than those for typical single family housing units.
3)California Earthquake Authority. The CEA was formed through
legislation in 1995 and 1996 to address an
insurance-availability crisis that followed the 1994 Northridge
earthquake. After that earthquake, many homeowners found it
difficult or impossible to find basic homeowner's insurance.
Many others were faced with the prospect of having their
homeowners' insurance non-renewed as insurance companies tried
to shed their exposure to earthquake risk. Because state law
requires insurers to offer earthquake insurance to their
applicants and holders of residential policies, the insurers'
retreat from the California market resulted in an availability
crisis for both homeowners and earthquake insurance. The
Department of Insurance reported in the summer of 1996, at the
height of the crisis, that 95% of the homeowners' insurance
market had either stopped, or severely restricted, sales of new
homeowners' policies. After the CEA began operations in
December 1996, the California homeowners' insurance market
recovered quickly. A Department of Insurance report noted that
at the peak of the availability crisis, 82 insurers had
restricted the sale of new homeowners' insurance policies. By
October 1997, only three insurers were restricting the sale of
new policies. Since that time, the requirement to offer
earthquake insurance has not been a factor in restricting the
availability of homeowners' insurance.
Analysis Prepared by:
Paul Riches / INS. / (916) 319-2086 FN: 0000731
AB 1429
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