BILL ANALYSIS
AB 280
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 280 (Blakeslee) - As Introduced: February 12, 2009
Policy Committee: Insurance
Vote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill authorizes the California Earthquake Authority (CEA)
to establish a grant or loan program to retrofit specified
"soft-story" buildings. Soft-story buildings are those with a
ground floor less stable than upper floors, most often due to
commercial or parking spaces at the first floor. Specifically,
this bill:
1)Requires the CEA to access and dispense federal stimulus
funding provided in the American Recovery and Reinvestment Act
(ARRA).
2)Requires funded projects to meet specified eligibility
criteria that have been adopted by local ordinance including
at-risk architectural features, a streamlined permit process,
tracking procedures, and size of building.
3)Requires that only federal funding be used for the grants and
loans.
FISCAL EFFECT
1)According to the Legislative Analyst's Office (LAO),
California will receive $1.1 billion (federal) to $1.3 billion
(federal) in housing-related funding from the ARRA. If this
bill helps California in accessing available federal funding,
the fiscal impact would be in the range of tens of millions of
dollars for retrofitting activities.
However, this bill fails to specify what particular funding
feature of ARRA the CEA would access to garner support for
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these projects. In addition, the author's office indicates
this bill is meant to be a vehicle for future, not yet
enacted, federal stimulus funding.
2)The federal ARRA emphasizes a rapid distribution of housing
funding for maximum economic impact. This bill, with its lack
of specificity, will fail to meet timing requirements with
regard to "shovel ready" projects.
3)Unknown staffing and administrative costs to the CEA to
support the grants and loans program created by this bill. CEA
is a privately financed, publicly managed agency with only 25
civil service positions and a handful of temporary and exempt
positions. Assuming a distribution of tens of millions of
dollars in grants was distributed by CEA in a rapid fashion,
staffing and administrative support would exceed $200,000
(federal). It is unclear how such federal support would be
appropriated to CEA, as CEA financing in not addressed in the
annual Budget Act.
COMMENTS
1)Rationale . This bill has been introduced to take advantage of
federal funding available through ARRA to create a soft-story
retrofit program administered by the CEA. A typical soft-story
building is a several-story apartment building located over a
parking garage or series of retail businesses. Soft-story
buildings are particularly vulnerable during earthquakes
because of structural weaknesses at the ground level.
2)Background. The CEA is administered under the authority of
the Insurance Commissioner (IC) and is privately financed by
more than 700,000 insurance policies and capital of more than
$2 billion. CEA is authorized to sell policies of basic
earthquake insurance in conjunction with policies of
residential property insurance issued by insurers that have
transferred their earthquake risk to the CEA.
3)Concerns . The California Rural Assistance Foundation (CRLA)
and the Western Center on Law and Poverty (WCLP) have each
suggested that CEA is not the most appropriate administering
agency for this bill. Instead, CRLA and WCLP indicate that the
Department of Housing and Community Development operates a
number of similar programs to those created by this bill and
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has better access to communities who may benefit from a
retrofit program.
4)Related Legislation . AB 43 (Blakeslee), pending in the
Assembly Insurance Committee, eliminates the current law CEA
cap on 25 civil service positions.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081