BILL ANALYSIS Ó
SB 465
Page 1
Date of Hearing: August 10, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 465
(Hill) - As Amended August 1, 2016
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|Policy |Business and Professions |Vote:|12 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill requires contractors to report specific disciplinary
information to the Contractors State Licensing Board (CSLB), and
requires the CSLB to conduct a study to determine if CSLB's
ability to protect the public could be improved, as specified.
Specifically, this bill:
1)This bill requires the CSLB, by January 1, 2018, to enter into
an interagency agreement with the Division of Occupational
Safety and Health (DOSH) and other state or local agencies, as
necessary, to ensure information relevant to CSLBs duty to
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protect the public is reported to the board in a timely
manner.
2)Requires a licensee, within 90 days, to report to the
Registrar of the CSLB in writing the occurrence of any
conviction of any felony or conviction of any crime that is
substantially related to the qualifications, functions, and
duties of a licensed contractor.
3)Requires the CSLB to report to the Legislature the results of
a study determining if the CSLB's ability to protect the
public would be enhanced by regulations requiring licensees to
report judgments, arbitration awards against them, or
settlement payments of claims for construction defects they
have made in excess of a certain amount to be determined by
the board.
4)Requires records or documents obtained by CSLB during the
course of the study that are exempt from public disclosure to
remain exempt.
5)Requires the California Building Standards Commission
(Commission) to convene a working group to investigate
existing building standards associated with the construction,
inspection, and maintenance of exterior elevated elements, and
recommend any statutory changes or changes to the California
Building Standards Code and requires the working group, by
January 1, 2018, to provide a report to the Senate Committee
on Business, Professions, and Economic Development.
FISCAL EFFECT:
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1)Total costs of approximately $540,000 in 2017-18 and $490,000
ongoing to the CSLB (special funds) for enforcement staffing
costs, Attorney General referral costs, and reporting costs
necessary to implement the requirements of this bill.
2)Annual ongoing costs to the Commission of approximately
$193,000 for the development and ongoing maintenance required
of additional building standards (special funds).
COMMENTS:
1)Purpose. According to the author, "Currently, state law does
not require contractors to report defect settlement cases to
the CSLB. Such disclosure requirements are routine for such
professionals as doctors, architects, and engineers. This
bill would empower the CSLB, like other boards, to be made
aware of licensee behavior for which they may need to take
swift action to promote public health and safety. The bill
additionally increases transparency so that consumers have the
tools necessary to make an informed decision about the quality
of the contractor they hire."
2)Background. On June 16, 2015, a balcony at Library Gardens
Apartments in Berkeley, California collapsed, killing six
students and injuring seven others. According to the San
Francisco Chronicle, the company responsible for that project
reportedly paid out $26.5 million in construction defect
settlements in just three years. Current law does not require
contractors to report defect settlements to the CSLB.
In response to this incident, the City of Berkeley tightened
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and approved new building standards. The City Council voted to
require that new balconies be made of corrosion-resistant
material and be ventilated to prevent a buildup of moisture.
At the time, the council also mandated that all balconies be
inspected within the subsequent six months, and every three
years after that.
According to the author, on April 19, 2016, the California
Building Standards Commission formally voted to assemble an ad
hoc committee to examine the facts of the Berkeley balcony
collapse and determine whether the Building Standards Code
needs to be updated. In July of 2015, the Berkeley City
Council sent a letter to CLSB urging them to revise Code to
require steel reinforcements on all new balcony designs, after
experts determined dry rot was the cause of the balcony
collapse.
3)Arguments in Support: The California Newspapers Publishers
Association writes in support, "By requiring contractors to
report this information, this bill will improve oversight of
these operations and assist the public in identifying repeat
offenders, or the existence of unsafe and unsettling patterns
and practices in the industry."
The Conference of California Bar Associations (CCBA) writes in
support, "For far too long, contractors, builders and their
lawyers, in cooperation with plaintiffs and their lawyers,
have been able to keep the facts about substandard, dangerous
and toxic conditions secret from public view by agreeing to
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settlements in public litigation that keep the facts of the
case secret. This bill would take a small but crucial step
towards increased public protection by laying the groundwork
for prohibiting these dangerous secrets relating to builders
and contractors from being hidden from the CSLB."
4)Arguments in Opposition. A coalition of builders and
contractors are opposed -unless-amended, stating "The
requirements in the bill that CSLB gather information on
construction defect case results will not provide the Board
with leads that have any significant chance of identifying bad
actors. Instead, it will only result in a waste of staff time
and resources."
5)Prior Legislation.
a) SB 467 (Hill), Chapter 656, Statutes of 2015, among
other things, extends the sunset date for the CSLB until
January 1, 2020, repeals a requirement relating to evidence
of financial solvency, and increases the amount for a
licensee to be bonded from $12,500 to $15,000, as
specified.
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b) AB 2570 (Hill), Chapter 561, Statutes of 2012,
prohibited licensees of any board, bureau or program under
the DCA from including a "regulatory gag clause" in civil
settlement agreements.
c) SB 679 (Berryhill), Chapter 471, Statutes of 2013,
revised the monetary threshold for a licensed engineer or
land surveyor to report a civil action settlement or
administrative action to the Board for Professional
Engineers, Land Surveyors, and Geologists (BPELSG), and
required a licensed engineer or land surveyor to report any
civil action judgment or binding arbitration award or
administrative action of $25,000 or greater.
d) SB 1549 (Figueroa), Chapter 691, Statutes of 2004,
required licensed engineers and land surveyors to report to
the BPESLG a felony conviction or a civil judgment,
settlement, arbitration award, or administrative action
award of $50,000 or more, occurring on or after July 1,
2006, if funds are appropriated for that purpose, as
specified, and required a court rendering the judgment or
conviction and a local agency, if self-insured, to report
to the board.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081
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