BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 602 (Monning) - Seismic safety: California Earthquake
Authority
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|Version: February 27, 2015 |Policy Vote: INS. 7 - 0, GOV. & |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 26, 2015 |Consultant: Maureen Ortiz |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: SB 602 adds the California Earthquake Authority (CEA)
to the definition of "public agency" for the purpose of
authorizing the CEA to finance the installation of seismic
strengthening improvements as specified.
Fiscal
Impact:
Minor, absorbable one-time costs to the Department of
Insurance (Special Fund)
The Department of Insurance indicates one-time costs of less
than $5,000 to review and evaluate the proposed financing
programs. All costs for the retrofitting program are paid from
non-state sources through the California Earthquake Authority.
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Background:1. Current law authorizes a city, county, or city and county, by the
adoption of a resolution, to enter into a voluntary contractual
assessment program that provides the 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.
The Earthquake Loss Mitigation Fund (ELMF) within the CEA provides
grants or loans to dwelling owners who wish to retrofit their homes.
The ELMF is funded by an allocation of five percent of CEA's
investment income, or $5 million, whichever is less, annually.
Current law allows cities and counties to create property
assessment districts for local public purposes, including
seismic mitigation. San Francisco, Berkeley and Oakland are in
the process of setting up districts for the purpose of financing
earthquake mitigation, largely focusing on commercial soft-story
and multiple family buildings.
In August 2011, the California Residential Mitigation Program
(CRMP) was established as a joint-exercise-of-powers entity by
the CEA and the Governor's Office of Emergency Services, (Cal
OES) to carry out mitigation programs to assist California
homeowners who wish to seismically retrofit their houses.
CRMP's goal is to provide grants and other types of assistance
and incentives for these mitigation efforts. The CRMP's first
program, launched in 2013, is the "Earthquake Brace and Bolt"
(EBB) program. It provides grants of up to $3,000 for
homeowners who have qualifying homes and meet specified building
code requirements. According to the CEA, 16 homes have qualified
and completed retrofits under the program, and 650 retrofits are
planned in 2015. CEA estimates that there are approximately 1.6
million owner-occupied houses in California that have meet the
criteria of the EBB-1.2 million of those are in higher-hazard
areas. Those numbers do not include other, non-EBB types of
homes that would benefit from seismic retrofits.
Proposed Law:
SB 602 does the following:
1) Adds the California Earthquake Authority to the
SB 602 (Monning) Page 2 of
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definition of "public agency" for the purpose of authoring
the CEA to finance the installation of seismic
strengthening improvements that are permanently fixed to
residential, commercial, industrial, agricultural, or other
real property.
2) Authorizes money in the Earthquake Loss Mitigation Fund
to be used to fund seismic strengthening improvements, and
to acquire debt obligations issued to fund these
improvements.
3) Exempts the CEA from specified requirements in the
statute applying to actions of the legislative bodies of a
city or county, as specified.
Staff
Comments: SB 602 is intended to provide homeowners with access
to funds that will enable them to complete seismic retrofitting
and to repay the loans through an assessment on their property
tax bills. According to the CEA, the average cost of Earthquake
Brace and Bolt retrofits is between $3,000 and $6,000 for single
family dwellings, but can cost $10,000 to $20,000 to retrofit
soft first-story homes. Current programs are insufficient to
accommodate the estimated 1.6 million homes that are in need of
seismic retrofitting.
The bill allows the CEA to create a new voluntary financing tool
for homeowners to mitigate and retrofit their homes. The
Property Secured Mitigation Program (PSMP) would allow the CEA
to provide 100% financing for residential mitigation projects
that meet approved engineering guidelines. The loan would become
a lien on the property and allow homeowners to pay for the costs
in installments in the form of debt service payments collected
through existing property tax collection mechanisms.
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