Senate BillNo. 602


Introduced by Senator Monning

February 27, 2015


An act to amend Section 10089.38 of the Insurance Code, and to amend Sections 5899, 8503, 10003, 10100.2, and 10104 of the Streets and Highways Code, relating to seismic safety, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 602, as introduced, Monning. Seismic safety: California Earthquake Authority.

Existing law establishes the California Earthquake Authority, which is authorized to transact insurance in the state as necessary to sell policies of basic residential earthquake insurance, as provided. Existing law provides that a public purpose will be served by a voluntary contractual assessment program that provides the legislative body of a public agency with the authority to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property. For purposes of financing the installation of seismic strengthening improvements, “public agency” means a city, county, or city and county.

This bill would include the California Earthquake Authority as part of the definition of “public agency” for this purpose.

The Improvement Bond Act of 1915, provides authority for the legislative body of any city to determine that bonds may be issued to pay for specified works of improvement. The Municipal Improvement Act of 1913 authorizes the legislative body of a municipality to pay or make funds available to enable the owners of lots or parcels of real property to pay for work deemed necessary to bring real property or buildings into compliance with seismic safety standards or regulations, as provided.

This bill would include the California Earthquake Authority as part of the definition of “city” or “municipality” for purposes of these acts.

Existing law authorizes the Earthquake Loss Mitigation Fund, a continuously appropriated fund, to be applied to supply grants and loans or loan guarantees to dwelling owners who wish to retrofit their homes to protect against earthquake damage.

This bill would also authorize the money in the fund to be used to fund seismic strengthening improvements permanently fixed to residential, commercial, industrial, agricultural, or other real property, and to acquire debt obligations issued to fund these improvements, thereby making an appropriation.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 10089.38 of the Insurance Code is
2amended to read:

3

10089.38.  

begin insert(a)end insertbegin insertend insertUpon the development and implementation of
4an economical system satisfactory to the board and the
5commissioner to prevent misapplication of mitigation funds, the
6Earthquake Loss Mitigation Fund may be applied to supply grants
7and loans or loan guarantees to dwelling owners who wish to
8retrofit their homes to protect against earthquake damage.

begin insert

9(b) Money in the Earthquake Loss Mitigation Fund may also
10be used for either of the following purposes:

end insert
begin insert

11(1) To fund seismic strengthening improvements authorized
12pursuant to Section 5899 of the Streets and Highways Code.

end insert
begin insert

13(2) To acquire debt obligations issued to fund improvements
14described in paragraph (1).

end insert
15

SEC. 2.  

Section 5899 of the Streets and Highways Code is
16amended to read:

17

5899.  

(a) The Legislature finds and declares all of the
18following:

19(1) It is the intent of the Legislature to address seismic safety
20needs throughout this state by permitting voluntary individual
21efforts to improve the seismic safety of homes and buildings. The
22Legislature further intends that this chapter should be used to
P3    1finance the installation of seismic strengthening improvements
2that are permanently fixed to residential, commercial, industrial,
3agricultural, or other real property, including, but not limited to,
4the seismic strengthening of cripple walls and sill plate anchorage
5of light, wood-framed buildings.

6(2) The upfront cost of making residential, commercial,
7industrial, agricultural, or other real property more seismically
8safe prevents many property owners from making those
9improvements. To make those improvements more affordable and
10to promote the installation of those strengthening improvements,
11it is necessary to authorize an alternative procedure for authorizing
12assessments to finance the cost of seismic strengthening
13improvements.

14(3) A public purpose will be served by a voluntary contractual
15assessment program that provides the legislative body of any public
16agency with the authority to finance the installation of seismic
17strengthening improvements that are permanently fixed to
18residential, commercial, industrial, agricultural, or other real
19property.

20(b) For purposes of this section, the following terms shall have
21the following meanings:

22(1) For the purpose of financing the installation of seismic
23 strengthening improvements, “public agency” means a city, county,
24or city and countybegin insert, or the California Earthquake Authorityend insert. The
25definition of “city” in Section 5005 shall not apply to this
26paragraph.

27(2) “Seismic strengthening improvements” means permanent
28seismic safety improvements fixed to residential, commercial,
29industrial, agricultural, or other real property.

30(c) The legislative body ofbegin delete anyend deletebegin insert aend insert public agency may designate
31an area, in the manner provided pursuant to Section 5898.20, within
32which authorized public agency officials and property owners may
33enter into voluntary contractual assessments to finance the
34installation of seismic strengthening improvements that are
35permanently fixed to real property pursuant to this chapter.

36(d) For purposes of establishing a voluntary contractual
37assessment program relating to seismic strengthening
38improvements, the legislative body shall make the determinations
39required pursuant to Section 5898.20 by adopting a resolution
40indicating its intention to do so. The resolution of intention shall
P4    1identify the kinds of seismic strengthening improvements that may
2be financed and shall include all of the information that is required
3pursuant to subdivision (b) of Section 5898.20, including, but not
4limited to, directing an appropriate public agency official to prepare
5a report pursuant to Section 5898.22.

6(e) For purposes of the report required pursuant to Section
75898.22, relating to a voluntary contractual assessment program
8for seismic strengthening improvements, the designated public
9agency official shall satisfy the requirements of paragraph (1) of
10subdivision (c) of Section 5898.22 by identifying the types of
11seismic strengthening improvements that may be financed through
12the use of contractual assessments.

13(f) Notwithstanding any other provision of this chapter, upon
14the written consent of an authorized public agency official, the
15proposed arrangements for financing the program pertaining to
16the installation of seismic strengthening improvements that are
17permanently fixed to real property may authorize the property
18owner to purchase directly the related equipment and materials for
19the installation of seismic strengthening improvements and to
20contract directly for the installation of seismic strengthening
21improvements that are permanently fixed to the property owner’s
22residential, commercial, industrial, agricultural, or other real
23property.

begin insert

24(g) Subdivisions (c) and (d) do not apply to the California
25Earthquake Authority.

end insert
26

SEC. 3.  

Section 8503 of the Streets and Highways Code is
27amended to read:

28

8503.  

“City” includes counties, cities and counties and public
29corporations, districts and agenciesbegin insert, and the California Earthquake
30Authorityend insert
.

31

SEC. 4.  

Section 10003 of the Streets and Highways Code is
32amended to read:

33

10003.  

“Municipality” and “city” include every city, city and
34county, or county, or other entity, public corporation, or agency
35authorized to operate under this division, including any joint
36powers entity created pursuant to Chapter 5 (commencing with
37Section 6500) of Division 7 of Title 1 of the Government Code
38and any special district organized for the purpose of aiding in the
39development or improvement of navigation or commerce to, or
40within, the districtbegin insert, and the California Earthquake Authorityend insert.

P5    1

SEC. 5.  

Section 10100.2 of the Streets and Highways Code is
2amended to read:

3

10100.2.  

(a) (1) begin deleteWhenever end deletebegin insertWhen end insertthe public interest or
4convenience requires, the legislative body may use the powers of
5this division to pay, or make funds available to enable the owners
6of lots or parcels of real property within the district to pay, for
7either of the following:

8(A) begin insert(i)end insertbegin insertend insertWork deemed necessary to bring real property or
9buildings, including privately owned real property or buildings,
10into compliance with seismic safety standards or regulations. The
11legislative body shall declare that public loans or funds provided
12to owners of private buildings for seismic strengthening of
13unreinforced buildings or other buildings, or real property, pursuant
14to this section constitute a public purpose resulting in a public
15benefit. Only work certified as necessary to comply with seismic
16safety standards or regulations by local building officials may be
17financed. No project involving the dismantling of an existing
18building and its replacement by a new building or the construction
19of a new or substantially new building may be financed pursuant
20to this section, except as otherwise provided in subparagraph (B).
21Work on qualified historical buildings or structures shall be done
22in accordance with the State Historical Building Code (Part 2.7
23(commencing with Section 18950) of Division 13 of the Health
24and Safety Code). Any financing for seismic strengthening of a
25residential structure containing units rented by households specified
26in Section 50079.5 of the Health and Safety Code before
27strengthening shall be subject to a regulatory agreement that will
28ensure that the number of those units in the structure will not be
29reduced and will remain available at affordable rents pursuant to
30Section 50053 of the Health and Safety Code as long as any
31assessments levied pursuant to this section on the parcel on which
32the structure is located remain unpaid.

begin delete

33No

end delete

34begin insert (ii)end insertbegin insertend insertbegin insertAend insert lot, parcel, or building shallbegin insert notend insert be included in the district
35without the owner’s consent.

36(B) Withinbegin delete anyend deletebegin insert anend insert area that has been designated by the Governor
37as a disaster area or for which the Governor has proclaimed the
38existence of a state of emergency because of earthquake damage,
39work deemed necessary to repair any damage to real property
40directly or indirectly caused by the occurrence of an earthquake
P6    1cited in the Governor’s designation or proclamation, or by
2aftershocks associated with that earthquake, including work to
3reconstruct, repair, shore up, or replace any real property or
4building damaged or destroyed by the earthquake or by its
5aftershocks. Work may be financed pursuant to this subparagraph
6only on real property or buildings identified in a resolution of
7intention to establish a district adopted within seven years of the
8date that the Governor designates the area as a disaster area or
9proclaims a state of emergency in the area.

10(2) begin deleteAny end deletebegin insertA end insertdistrict created to finance seismic safety work on
11privately owned buildings, including repair, reconstruction, or
12replacement of privately owned buildings pursuant to this section,
13shall consist only of lots or parcels on which the legislative body
14finds that the buildings to be worked on, repaired, reconstructed,
15or replaced pursuant to this section, are located or were located
16before being damaged or destroyed by the earthquake that is the
17subject of the Governor’s designation or proclamation pursuant to
18subparagraph (B) of paragraph (1), or by the aftershocks of that
19earthquake.begin insert Notwithstanding Division 7 (commencing with Section
205000) or this division, this paragraph shall not apply to any district
21created by the California Earthquake Authority.end insert

22(3) The Legislature hereby declares that the use of public funds
23pursuant to this section for seismic strengthening, repair, or
24reconstruction of privately owned real property or buildings
25constitutes a public purpose resulting in a public benefit. The use
26of funds pursuant to this section shall not be construed to be gifts
27of public funds in violation of Section 6 of Article XVI of the
28California Constitution.

29(4) A loan or expenditure of funds made by a district pursuant
30to this section and secured by a tax assessment or a lien, or both
31that assessment and lien, on private property shall not, when
32combined with existing liens on the property, exceed 80 percent
33of the current appraised value of the property, as determined by
34an independent, certified appraiser, unless existing lienholders
35consent in writing to a higher loan-to-value ratio. Notice of the
36creation of a district or the authorization for the loan or expenditure
37of funds for the purposes set forth in this section shall be given to
38lienholders of record on the property included in the district at
39least 30 days prior to any vote of the governing body authorizing
P7    1the creation of the district or the loan or expenditure of funds that
2could create a lien on the property.

3(b) A district created to finance seismic safety or repair work
4pursuant to this section may include areas of territory that are not
5contiguous.

6(c) At any time after the passage of the resolution provided for
7in subdivision (a) of Section 10312, the legislative body may make
8changes in or modify the improvements or reduce the assessment
9with respect to a particular lot or parcel within an assessment
10district created for the purposes of this section with the written
11consent of the owner of that lot or parcel.

12(d)  Any changes made within an assessment district created
13for the purposes of this section shall be made after notice and
14hearing, as provided in this division, except that changes may be
15made under any of the following circumstances:

16(1) At the hearing on the report, changes that do any of the
17following:

18(A) Eliminate a portion of the assessment district without
19increasing the amount of any assessment or substantially affecting
20the distribution of benefits from the improvements.

21(B) Exclude territory that will not be benefited by the remaining
22improvements without increasing the amount of any assessment.

23(C) Modify the improvements or the assessment with respect
24to a particular lot or parcel within the assessment district with the
25written consent of the owner and without increasing the
26assessments on any other real property.

27(2) At any time after the improvements are ordered and during
28the pendency of the proceedings to establish the assessment district.

29(3) At any time after the adoption of the resolution provided for
30in subdivision (a) of Section 10312, to modify the improvements
31 or reduce the assessment with respect to a particular lot or parcel
32within the assessment district with the written consent of the owner.

33(e) An action to determine the validity of any assessments,
34bonds, bond anticipation notes, contracts, or improvements for the
35purposes of this section may be brought by the legislative body,
36or by any person designated by the legislative body, pursuant to
37Chapter 9 (commencing with Section 860) of Title 10 of the Code
38of Civil Procedure. For this purpose, an improvement shall be
39deemed to be in existence upon its authorization and an assessment
40upon its confirmation.

P8    1(f) It is the intent of the Legislature that the powers conferred
2by this section shall be in addition and supplemental to, and not
3exclusive of, the powers conferred by any other law.

4

SEC. 6.  

Section 10104 of the Streets and Highways Code is
5amended to read:

6

10104.  

begin insert(a)end insertbegin insertend insertWhenbegin delete anyend deletebegin insert aend insert proceeding is initiated under this
7division by a legislative body other than that of a city or county,
8and before the resolution of intention is adopted, the proposed
9resolution, together with a plat or map which shall indicate by a
10boundary line the extent of territory included in the proposed
11district, shall be submitted for approval of the legislative body of
12the city, where the land to be assessed lies within the corporate
13limits of any city, or of the county, where the land to be assessed
14lies within an unincorporated territory. Whenbegin delete suchend deletebegin insert theend insert approval
15has been secured, the resolution of intention may be adopted and
16the legislative body initiating the proceeding may thereafter take
17each and every step required for or suitable for the consummation
18of the work and the levying, collecting and enforcement of the
19assessments to cover the expenses thereof and the issuance and
20enforcement of bonds to represent unpaid assessments.

begin insert

21(b) Notwithstanding Division 7 (commencing with Section 5000)
22or this division, this section shall not apply to any district created
23by the California Earthquake Authority.

end insert


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