BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 465|
          |Office of Senate Floor Analyses   |                              |
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                                UNFINISHED BUSINESS 


          Bill No:  SB 465
          Author:   Hill (D) and Hancock (D)
          Amended:  8/29/16  
          Vote:     21 

           PRIOR VOTES NOT RELEVANT

           SENATE BUS., PROF. & ECON. DEV. COMMITTEE:  (pursuant to Senate  
            Rule 29.10) (ROLL CALL NOT AVAILABLE)

           ASSEMBLY FLOOR:  62-0, 8/31/16 (ROLL CALL NOT AVAILABLE)

           SUBJECT:   Building construction:  contractors:  discipline:   
                     reporting:  building standards


          SOURCE:    Author
          
          DIGEST:  This bill permits the Contractors State Licensing Board  
          (CSLB or Board) to enter into an interagency agreement with  
          state or local agencies to ensure that the Board receives  
          specified disciplinary information relating to a contractor in a  
          timely manner; requires a licensee to report to the CSLB the  
          occurrence of any conviction of any felony or crime, as  
          specified; requires the California Building Standards Commission  
          (CBSC) to convene a specified working group and recommend any  
          statutory changes or changes to CBSC; requires the Division of  
          Occupational Safety and Health (Division), after consultation  
          with the CSLB, to transmit to the CSLB copies of any citations  
          or other actions taken by the Division against a contractor, as  
          defined; and requires the CSLB to report the results of a study  
          to determine if the CSLB's ability to protect the public would  
          be enhanced by specified regulations.










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          Assembly Amendments delete the Senate version of the bill,  
          dealing with the sunset extension of the CSLB, and instead add  
          the current language. 


          ANALYSIS: 


          Existing law:


           1) Provides for the licensure and regulation of more than  
             300,000 contractors under the Contractors' State License Law  
             by the CSLB within the Department of Consumer Affairs.  The  
             CSLB is under the direction of the Registrar of Contractors  
             (Registrar).  (Business and Professions Code (BPC) § 7000 et  
             seq.)
           2) Requires licensees to notify the Registrar in writing of any  
             unsatisfied final judgment imposed on the licensee, and  
             authorizes the Registrar to automatically suspend the license  
             on the date the Registrar is informed of an unsatisfied final  
             judgment if the licensee failed to notify the Registrar in  
             writing within 90 days of that judgment, as specified.  (BPC  
             § 7071.17(b))


           3) Provides that a conviction of a crime, substantially related  
             to the qualifications, functions and duties of a contractor,  
             constitutes a cause for disciplinary action, and that the  
             record of the conviction shall be conclusive evidence  
             thereof.  (BPC § 7123) 


           4) Provides that a plea or verdict of guilty, or a conviction  
             following a plea of nolo contendere, is deemed to be a  
             conviction, and that the CSLB may order a license to be  
             suspended or revoked, or may decline to issue a license, when  
             the time for appeal has elapsed, or the judgment of  
             conviction has been affirmed on appeal, as specified.  (BPC §  
             7124) 










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           5) Requires the Registrar to make available to the public the  
             date, nature, and status of all complaints on file against a  
             licensee that do either of the following: 


              a)    Have been referred for accusation; or, 
              b)    Have been referred for investigation, after a  
                determination by CSLB enforcement staff, that a probable  
                violation has occurred, and have been reviewed by a  
                supervisor, and involve allegations that if proven would  
                present a risk of harm to the public and would be  
                appropriate for suspension or revocation of the  
                contractor's license or criminal prosecution.  


              (BPC § 7124.6 (a))
           6) Requires the CSLB to create a disclaimer to accompany the  
             disclosure stating that it is an allegation and any other  
             information the CSLB determines would be relevant to a person  
             evaluating the complaint.  (BPC § 7124.6 (b))
           7) Provides that a complaint resolved in favor of the  
             contractor shall not be subject to disclosure.  (BPC §  
             7124.6(c)) 


           8) Requires the Registrar to make available to the public the  
             date, nature, and disposition of all legal actions, subject  
             to the following: 


              a)    Limits the disclosure of legal actions for citations  
                from the date of issuance for five years after the date of  
                compliance if no additional disciplinary actions have been  
                taken against the licensee during that period;
              b)    Limits the disclosure of accusations that result in  
                suspension, stayed suspension, or stayed revocation of the  
                contractor's license from the date accusation is filed for  
                seven years if no additional disciplinary actions have  
                been taken against the licensee during that period; and, 


              c)    All revocations that are not stayed shall be disclosed  








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                indefinitely from the effective date of the revocation.   
                (BPC § 7124.6(e))


           9) Provides that the Division has the power, jurisdiction, and  
             supervision over every employment and place of employment in  
             this state, which is necessary to adequately enforce and  
             administer all laws and lawful standards and orders, or  
             special orders requiring such employment and place of  
             employment to be safe, and requiring the protection of the  
             life, safety, and health of every employee in such employment  
             or place of employment.  (Labor Code § 6307)
           10)Creates CBSC under the Department of General Services.   
             Provides that CBSC review the standards of adopting state  
             agencies and approve, return for amendment with recommended  
             changes, or reject building standards submitted to CBSC for  
             its approval, as provided.  (Health and Safety Code §  
             18912;18931)


          This bill:


           1) Permits the CSLB to enter into an interagency agreement with  
             any state or local agency the CSLB deems to be in possession  
             of information relevant to its priority to protect the  
             public.


           2) Requires a licensee to report to the Registrar of the CSLB  
             in writing within 90 days after the licensee obtains  
             knowledge of the occurrence of a conviction of any felony or  
             a conviction of any crime that is substantially related to  
             the qualifications, functions, and duties of a licensed  
             contractor.


           3) Requires CSLB to consult with licensees, consumers, and  
             other interested stakeholders in order to prepare a study of  
             judgments, arbitration awards, and settlements that were the  
             result of claims for construction defects for rental  
             residential units and, by January 1, 2018. Requires the CSLB  








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             to report to the Legislature, by January 1, 2018, the results  
             of this study to determine if the Board's ability to protect  
             the public would be enhanced by regulations requiring  
             licensees to report judgments, arbitration awards, or  
             settlement payments of those claims.


           4) Requires that the records or documents obtained by the Board  
             during the course of performing the study that are exempt  
             from public disclosure under the California Public Records  
             Act remain exempt from disclosure.


           5) Requires CBSC to convene a working group to study recent  
             exterior elevated element failures in California and requires  
             the working group to report to the appropriate policy  
             committees of the Legislature, by January 1, 2018, containing  
             any findings and possible recommendations for statutory  
             changes or changes to the CBSC. 


           6) Requires the working group to review related documents and  
             reports, including, but not limited to, any available  
             forensic reports related to exterior elevated element  
             failures in California, reports and studies used in the  
             development of national and state building codes, and any  
             other material deemed relevant to make recommendations to the  
             appropriate state agency or agencies for the development of  
             proposed building standards for exterior elevated elements.


           7) Requires the working group to solicit technical expertise as  
             appropriate from, but not limited to, representatives from  
             the Department of Housing and Community Development, the  
             Division of the State Architect-Structural Safety, the Office  
             of the State Fire Marshal, local building officials and plan  
             checkers, structural engineers, apartment owners and  
             managers, the building industry, the wood, steel and concrete  
             industries, and any other interested parties. 


           8) Requires that if, at any time, it is determined by the  








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             working group that one or more changes to the CBSC are needed  
             as soon as possible in order to protect the public, the  
             working group will submit the recommended changes to the  
             appropriate state agency or agencies for consideration as  
             soon as possible.


           9) Sunsets the composition and duties of the working group to  
             January 1, 2018.


           10)Requires the Division, after consultation with the CSLB, to  
             transmit to the CSLB copies of any citations or other actions  
             taken by the Division against a contractor as defined in the  
             Contractors State License Law.


           11)Provides that, by allowing records and documents exempt from  
             disclosure to be shared with the CSLB and remain nonpublic  
             under the Public Records Act, this act would encourage  
             private individuals and entities to provide the Board with  
             information that is vital to the success of its study and  
             report to determine whether additional regulations are  
             appropriate. Provides that this act properly balances the  
             public's right to access to public records in the possession  
             of the Board with the need for the state to obtain otherwise  
             private information.


          Background


          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."








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          According to the author, this bill establishes greater  
            accountability for contractors by ensuring the public has  
            critical disciplinary information about licensees.  As an  
            example of this need for transparency, the author notes the  
            tragic Berkeley, California balcony collapse, which killed six  
            people.  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, yet  
            the CSLB was unaware of these settlements because licensees  
            are not required by law to report to the Registrar the result  
            of settlements that are not handled directly by the CSLB.  As  
            a result, information that can be used to help consumers  
            protect themselves from possible fraud or misrepresentation is  
            not known.


          Informational hearing.  On April 26, 2016, the Senate Committee  
            on Business, Professions, and Economic Development held an  
            informational hearing on the Berkeley Balcony Collapse and  
            discussed what next steps the Legislature should take to  
            ensure the public's protection against shoddy workmanship.   
            While the hearing discussed a broad range of issues, it was  
            agreed upon that this issue of reporting requirements for  
            contractors required additional conversations and the  
            inclusion of all interested stakeholders.  


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Assembly Appropriations Committee, this bill  
          would result in total costs of approximately $540,000 in 2017-18  
          and $490,000 ongoing to the CSLB for enforcement staffing costs,  
          Attorney General referral costs and reporting costs necessary to  
          implement the requirements of this bill.  The bill will also  
          result in annual ongoing costs to CBSC of approximately $193,000  
          for the development and ongoing maintenance required of  
          additional building standards.









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          SUPPORT:   (Verified8/30/16)


          California Newspaper Publishers Association 
          Center for Public Interest Law
          City of Berkeley, Office of the Mayor 
          Consulate General of Ireland
          The Conference of California Bar Associations
          Victims' Families


          OPPOSITION:   (Verified8/30/16)


          None received

          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 Center for Public Interest Law writes in support, "Whereas  
          in every other example, the requirements for self-reporting are  
          set by fiat, in statute, by the Legislature, the author has  
          amended SB 465 to empower the expert CSLB to simply to review  
          the issue and offer its nonbinding observations?"

          The Conference of California Bar Associations 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 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]."
           
          Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104








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          8/31/16 21:29:58


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