BILL ANALYSIS Ó
AB 1440
Page 1
Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1440 (Nazarian) - 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 (one to four unit) residential structures in high-risk
earthquake areas.
AB 1440
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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 and the current grant
program is funded by a portion of CEA investment income.
2)However, creation of the program in statute, 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 size and scope of the expansion of this existing grant
program is unknown, but would likely be in the millions of
dollars. For example, $4.5 million in total funding would
provide retrofit-incentive grants of $3,000 for 1,500
single-family houses.
The current 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).
COMMENTS:
AB 1440
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1)Purpose. California has an existing seismic mitigation
incentive program called 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)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 program in 2014.
The bill would require the existing JPA to develop the program
AB 1440
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requirements for small, multi-family residential structures
along the lines of the existing EBB program.
4)Related Legislation. AB 1429 (Chiu), also in today's agenda,
is nearly identical to this bill, but establishes a statutory
structure for seismic retrofit grant program for multiunit
houses instead of individual homeowners.
Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081