BILL NUMBER: SB 602	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  AUGUST 18, 2015
	AMENDED IN ASSEMBLY  JUNE 17, 2015

INTRODUCED BY   Senator Monning

                        FEBRUARY 27, 2015

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


	LEGISLATIVE COUNSEL'S DIGEST


   SB 602, as amended, 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,   1915
 provides authority for the legislative body of any city to
determine that bonds may be issued to pay for specified works of
improvement.
   This bill would include the California Earthquake Authority as
part of the definition of "city" or "municipality" for purposes of
this act.
   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,   property  and  an 
 account for related loan losses, and  to acquire debt
obligations issued to fund these  seismic strengthening 
improvements, thereby making an appropriation. The bill would
 also   require the California Earthquake 
 Authority to establish a loan loss reserve account in the fund
for the deposit of moneys to be expended for loan losses incurred in
connection with financing seismic strengthening improvements. 
    This bill would  (1) revise or waive certain notice and
reporting requirements generally applicable to contractual
assessments for contractual assessments that finance seismic
strengthening improvements, (2) absent specified conditions, presume
statewide scope of any California Earthquake Authority programs of
contractual assessments for seismic strengthening improvements, and
(3) provide for payment of assessments pursuant to the contractual
payment schedule for any California Earthquake Authority program,
notwithstanding any bonds secured by those assessments.  The bill
would require the California Earthquake Authority, prior to entering
into a voluntary contractual assessment with a property owner to
finance seismic strengthening improvements, to disclose the terms and
conditions of the voluntary contractual assessment, and to noti
  fy the property owner, in writing, that he or she may be
required to pay the remaining principal balance of the voluntary
contractual assessment when he or she refinances or sells the
property. The bill would specify that the California Earthquake
Authority shall require each property owner to sign a document
acknowledging his or her receipt of this written disclosure. The bill
would also require that seismic strengthening improvements that are
permanently fixed to real property and that are financed pursuant to
the program comply with all applicable state and local building
standards. 
   Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10089.38 of the Insurance Code is amended to
read:
   10089.38.   (a)    Upon the
development and implementation of an economical system satisfactory
to the board and the commissioner to prevent misapplication of
mitigation funds, money in the Earthquake Loss Mitigation Fund may be
applied to all of the following: 
   (1) 
    (a)  To supply grants and loans or loan guarantees to
dwelling owners who wish to retrofit their homes to protect against
earthquake damage. 
   (2) 
    (b)  To fund seismic strengthening improvements  and
a loan loss reserve account as  authorized by Section 5899 of
the Streets and Highways Code. 
   (3) 
    (c)  To acquire debt obligations issued to fund seismic
strengthening improvements funded pursuant to  paragraph (2)
  subdivision (b)  .
  SEC. 2.  Section 5899 of the Streets and Highways Code is amended
to read:
   5899.  (a) The Legislature finds and declares all of the
following:
   (1) It is the intent of the Legislature to address seismic safety
needs throughout this state by permitting voluntary individual
efforts to improve the seismic safety of homes and buildings. The
Legislature further intends that this chapter should be used to
finance the installation of seismic strengthening improvements that
are permanently fixed to residential, commercial, industrial,
agricultural, or other real property, including, but not limited to,
the seismic strengthening of cripple walls and sill plate anchorage
of light, wood-framed buildings.
   (2) The upfront cost of making residential, commercial,
industrial, agricultural, or other real property more seismically
safe prevents many property owners from making those improvements. To
make those improvements more affordable and to promote the
installation of those strengthening improvements, it is necessary to
authorize an alternative procedure for authorizing assessments to
finance the cost of seismic strengthening improvements.
   (3) A public purpose will be served by a voluntary contractual
assessment program that provides the legislative body of any 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.
   (b) For purposes of this section, the following terms shall have
the following meanings:
   (1) For the purpose of financing the installation of seismic
strengthening improvements, "public agency" means a city, county, or
city and county, or the California Earthquake Authority. The
definition of "city" in Section 5005 shall not apply to this
paragraph.
   (2) "Seismic strengthening improvements" means permanent seismic
safety improvements fixed to residential, commercial, industrial,
agricultural, or other real property.
   (c) The legislative or governing body of a public agency may
designate an area, in the manner provided pursuant to Section
5898.20, within which authorized public agency officials and property
owners may enter into voluntary contractual assessments to finance
the installation of seismic strengthening improvements that are
permanently fixed to real property pursuant to this chapter.
   (d) For purposes of establishing a voluntary contractual
assessment program relating to seismic strengthening improvements,
the legislative  or governing  body shall make the
determinations required pursuant to Section 5898.20 by adopting a
resolution indicating its intention to do so. The resolution of
intention shall identify the kinds of seismic strengthening
improvements that may be financed and shall include all of the
information that is required pursuant to subdivision (b) of Section
5898.20, including, but not limited to, directing an appropriate
public agency official to prepare a report pursuant to Section
5898.22.
   (e) For purposes of the report required pursuant to Section
5898.22, relating to a voluntary contractual assessment program for
seismic strengthening improvements, the designated public agency
official shall satisfy the requirements of paragraph (1) of
subdivision (c) of Section 5898.22 by identifying the types of
seismic strengthening improvements that may be financed through the
use of contractual assessments.
   (f) Notwithstanding any other provision of this chapter, upon the
written consent of an authorized public agency official, the proposed
arrangements for financing the program pertaining to the
installation of seismic strengthening improvements that are
permanently fixed to real property may authorize the property owner
to purchase directly the related equipment and materials for the
installation of seismic strengthening improvements and to contract
directly for the installation of seismic strengthening improvements
that are permanently fixed to the property owner's residential,
commercial, industrial, agricultural, or other real property.
   (g) Notwithstanding any other provision of this chapter, and
unless otherwise specified in the resolution of intention adopted
pursuant to subdivision (d) and the report required by Section
5898.22, the area within which the California Earthquake Authority
and property owners may enter into voluntary contractual assessments
pursuant to this chapter to finance the installation of seismic
strengthening improvements that are permanently fixed to real
property shall include the entire state. The California Earthquake
Authority shall not be required to designate, describe, or provide a
map of that area in the resolution of intention adopted pursuant to
subdivision (d), the report required by Section 5898.22, or
otherwise, unless that area covers an area smaller than the entire
state.
   (h) Notwithstanding any other provision of this chapter or any
other law, with regard to the establishment of a voluntary
contractual assessment program pursuant to this chapter to finance
the installation of seismic strengthening improvements that are
permanently fixed to real property, the California Earthquake
Authority shall be required to publish the notice required by
subdivision (a) of Section 5898.24 solely in a newspaper of general
circulation within the County of Sacramento. 
   (i) The California Earthquake Authority shall establish a loan
loss reserve account in the Earthquake Loss Mitigation Fund,
established pursuant to Section 10089.37 of the Insurance Code, for
the deposit of moneys to be expended for loan losses incurred in
connection with financing seismic strengthening improvements
authorized by this section. The California Earthquake Authority shall
develop guidelines and a methodology for determining adequate
funding levels for the account sufficient to cover loan losses
related to the implementation of the voluntary contractual assessment
program pursuant to this section.  
   (j) Prior to entering into a voluntary contractual assessment with
a property owner to finance seismic strengthening improvements under
this section, the California Earthquake Authority shall disclose the
terms and conditions of the voluntary contractual assessment and
notify the property owner, in writing, that he or she may be required
to pay the remaining principal balance of the voluntary contractual
assessment when he or she refinances or sells the property. The
California Earthquake Authority shall require each property owner to
sign a document acknowledging his or her receipt of this written
disclosure.  
   (k) The installation of seismic strengthening improvements that
are permanently fixed to real property and that are financed pursuant
to this chapter shall comply with all applicable state and local
building standards.  
   (i) 
    (l)    Subdivision (b) of Section 5898.24 shall
not apply to a voluntary contractual assessment program established
pursuant to this chapter solely to finance the installation of
seismic strengthening improvements that are permanently fixed to real
property. 
   (j) 
    (   m)  Notwithstanding any other provision of
this chapter, the Improvement Bond Act of 1915 (Division 10
(commencing with Section 8500)), or any other law, any voluntary
contractual assessment entered into with respect to a program
established by the California Earthquake Authority under this chapter
shall be made under the payment schedule set forth in the contract
providing for that voluntary contractual assessment, whether or not
any bonds secured by that voluntary contractual assessment have been
issued.
  SEC. 3.  Section 8503 of the Streets and Highways Code is amended
to read:
   8503.  "City" includes counties, cities and counties and public
corporations, districts and agencies, and the California Earthquake
Authority.