Amended in Assembly April 20, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1440

Introduced by Assembly Member Nazarian

(Coauthor: Assembly Member Chiu)

February 27, 2015

An act to begin delete amend Section 10082.5 of, and to end delete add Section 10089.395 begin delete to, end delete begin insert to end insert the Insurance Code, relating to earthquake begin delete insurance. end delete begin insert loss mitigation. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1440, as amended, Nazarian. Earthquake loss mitigation: grant programs.

Existing law, the California Earthquake Authority Act, establishes the California Earthquake Authority (the 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, to be administered by a joint powers authority of the authority and the Office of Emergency Services, that would give a grant to an applicant who owns and lives in a 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 authority and the Office of Emergency Services. The bill would require the CRMP to implement a grant program and give a grant to a qualifying owner of a end insert single-family residential structure begin delete for the purpose of paying a portion of end delete begin insert to defray end insert the begin insert owner’s end insert cost of seismic retrofit work to the structure, as specified begin insert , 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 review and public comment, to adopt policies and procedures end insert necessary to implement the grant program and to establish eligibility criteria for participation in the grant program. This bill would establish the maximum amount of a grant to an begin delete applicant, and would provide that a low-income applicant with an adjusted gross income that does not exceed specified limits does not have to provide matching funds as a condition of obtaining a grant under the program. 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 begin insert applicant. end insert

begin delete

Existing law prohibits an insurer who charges an additional earthquake insurance premium or deductible because a dwelling fails to meet certain building requirements relating to earthquake bracing from charging the additional premium or deductible if the dwelling is brought into compliance with those requirements, as specified.

end delete begin delete

This bill would make nonsubstantive, technical changes by deleting obsolete portions of those provisions.

end delete

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 the risk 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.

begin delete

SEC. 2.  

Section 10082.5 of the Insurance Code is amended to
read:

10082.5.  

(a) If an insurer subject to this chapter charges an
additional earthquake insurance premium or deductible because a
dwelling fails to comply with paragraph (1), (2), or (3) and the
dwelling is subsequently brought into compliance with any one of
these paragraphs, then the additional premium or deductible
attributed to noncompliance shall not be charged.

(1) Compliance with Section 19215 of the Health and Safety
Code for the bracing, anchoring, or strapping all water heaters to
resist falling or horizontal displacement due to earthquake motion.

(2) Compliance with the foundation anchor bolt requirements
of the 2007 edition of the California Building Standards Code as
specified in Title 24 of the California Code of Regulations, or a
successor edition of that code, or with any local government
modifications to those requirements.

(3) Compliance with the bracing requirements for cripple walls
of the 2007 edition of the California Building Standards Code as
specified in Title 24 of the California Code of Regulations, or a
successor edition of that code, or with any local government
modifications to those requirements.

(b)  A copy of the approved inspection record for the building
permit for work performed pursuant to this section shall be
submitted by the insured to the insurer in order to verify that
retrofits performed pursuant to this section have been performed.

end delete

begin delete SEC. 3. end delete
begin insert SEC. 2. end insert   

Section 10089.395 is added to the Insurance Code, immediately following Section 10089.39, to read:

begin delete

10089.395.  

(a) On or before July 1, 2016, the authority shall
establish a grant program that is administered by a joint powers
authority of the California Earthquake Authority and the Office
of Emergency Services for the purpose of providing monetary
grants that assist a qualified homeowner by defraying the
homeowner’s cost of seismic retrofitting of residential structures.

end delete

begin insert

begin insert 10089.395. 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 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 make grants that assist
a qualifying owner of a single-family 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, and lives in, the
structure to be retrofitted.

(2) The structure is a single-family, detached, residential
building of not more than four dwelling units.

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

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

(5) 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 (e). end insert

begin insert

(d) A grant shall not exceed the lesser of 75 percent of the cost
of the qualifying retrofit work, or three thousand dollars ($3,000).

end insert begin delete

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

end delete

begin insert (e) 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, establishing structural eligibility requirements for
structures that will receive seismic retrofit work, defining criteria
for determining whether a structure is located in a high-risk
earthquake area, and defining criteria for seismic retrofit work that
qualifies as work eligible for receipt of a grant. 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) A grant shall not exceed the lesser of 75 percent of the cost
of the qualifying retrofit work, or three thousand dollars ($3,000).

(e) A single person with an adjusted gross income of fifty
thousand dollars ($50,000) or less, or a married couple with an
adjusted gross income of one hundred thousand dollars ($100,000)
or less, as defined by Section 62 of the Internal Revenue Code,
shall not be required to provide matching funds as a condition of
receiving a grant.

(f) 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