BILL ANALYSIS                                                                                                                                                                                                    Ó



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          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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