BILL ANALYSIS
AB 1755
Page 1
Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 1755 (Swanson) - As Amended: April 5, 2010
SUBJECT : Seismic Safety Finance Act.
SUMMARY : Expands the authorization that allows public agencies
to enter into contractual assessments to finance the
installation of specified improvements to now include seismic
strengthening improvements. Specifically, this bill :
1)Authorizes a public agency to enter into a contractual
assessment with a willing property owner to finance the
installation seismic strengthening improvements.
2)States that it is the intent of the Legislature to address
seismic safety needs throughout California by permitting
voluntary individual efforts to improve the seismic safety of
homes and buildings.
3)States that it is the intent of the Legislature that the
authorization created by this bill 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.
4)States that the upfront cost of making residential,
commercial, industrial, agricultural,
or other real property more seismically safe prevents many
property owners from making those improvements.
5)States that 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.
6)Defines "seismic strengthening improvements" as permanent
improvements fixed to residential, commercial, industrial,
agricultural, or other real property.
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EXISTING LAW :
1)Authorizes public agencies, as defined, in California to
designate areas within which legislative bodies and willing
property owners may enter into contractual assessments to
finance the installation of distributed generation renewable
energy sources or energy or water efficiency improvements.
2)States legislative intent that the authorization listed above
should be used to finance the installation of distributed
generation renewable energy sources and energy or water
efficiency improvements that are fixed to residential,
commercial, industrial, agricultural, and other real property.
3)States that for the purpose of financing the installation of
water efficiency improvements, "public agency" means a city,
county, city and county, municipal utility district, community
services district, sanitary district, sanitation district, or
water district.
4)Prohibits the authorization from being used to finance the
purchase or appliances or installations not fixed to real
property.
5)Makes findings and declarations concerning the need for energy
and water efficiency improvements in order to address global
climate change, the deterrent effect of high up-front costs on
making those improvements, and the need to authorize an
alternative procedure for authorizing assessments to finance
the cost of energy efficiency improvements in order to make
them more affordable and promote their installation.
6)Declares that a public purpose will be served by a contractual
assessment program that provides the legislative body of
specified public agencies with the authority to finance the
installation of distributed generation renewable energy
sources or energy or water efficiency improvements to
residential, commercial, industrial, agricultural and other
real property.
7)Authorizes the legislative body to determine that it would be
convenient, advantageous, and in the public interest to
designate an area within the public agencies jurisdiction,
which may encompass the entire jurisdiction or a lesser
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portion, within which authorized legislative body officials
and property owners may enter into contractual assessments to
finance the installation of distributed generation renewable
energy sources or energy or water efficiency improvements that
are fixed to the property.
8)States that the term "energy efficient improvements" includes,
but is not limited to, the installation of distributed
generation renewable energy resources; and, that any energy
efficiency improvement must be fixed to the real property.
9)Requires that the resolution adopted by the governing body
direct the appropriate city official to prepare a report
including specified provisions.
10)Provides that, upon the written consent of an authorized city
official, the proposed arrangements for financing the program
pertaining to the installation of distributed generation
renewable energy resources, energy or water efficiency
improvements fixed to real property may authorize the property
owner to purchase directly the related equipment and materials
and to contract directly for the work on the property owner's
residential, commercial, industrial, and other real property.
11)Specifies that assessments may be levied only with the free
and willing consent of the owner of each lot or parcel on
which an assessment is levied at the time the assessment is
levied.
12)States that assessments levied pursuant to this chapter, and
the interest and any penalties thereon shall constitute a lien
against the lots and parcels of land on which they are made
until they are paid.
13)Specifies that the collection of assessments in the same
manner and at the same time as the general taxes of the city
on real property are payable.
14)Requires that a specified city official enter into
consultations with the office of the county auditor or
controller in order to reach agreement on what additional
fees, if any, will be charged to the city or county for
incorporating the proposed contractual assessments into the
assessments of the general taxes of the city or county on real
property, and to include a report on the results of these
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consultations in the report to be submitted to the legislative
body of the city.
15)Requires a legislative body to publish notice of a hearing
regarding contractual assessments.
16)Defines "city" for purposes of these sections as a city,
county, or city and county.
17)Defines "water district" as any district or other political
subdivision, other than a city or county, a primary function
of which is the irrigation, reclamation, or drainage of land
or the diversion, storage, management, or distribution of
water primarily for domestic, municipal, agricultural,
industrial, recreation, fish and wildlife enhancement, flood
control, or power production purposes.
18)Specifies for the purpose of financing the installation of
distributed generation renewable energy sources or energy
efficiency improvements, "public agency" means a county, city,
city and county, or a municipal utility district, an
irrigation district, or public utility district that owns and
operates an electric distribution system.
19)Authorizes, under the Mello-Roos Community Facilities Act of
1982, a community facilities district to pay for work deemed
necessary to bring buildings or real property, including
privately owned buildings or real property, into compliance
with seismic safety standards or regulations. Only work
certified as necessary to comply with seismic safety standards
or regulations by local building officials may be financed.
FISCAL EFFECT : None
COMMENTS :
1)In a major (magnitude 7 or so) earthquake on the Hayward
fault, Association of Bay Area Governments (ABAG) estimates
that 26,000 of the 163,000 housing units in Oakland will
become uninhabitable. Most (14,700) of the uninhabitable
units will be in "soft story" apartment and condominium
buildings that contain three or more units. Apartments and
condos most likely to be damaged house those with the fewest
resources after earthquakes, and thus, most likely to need
shelter for the longest periods of time.
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According to reports issued by ABAG, "many apartments and
condos can collapse in earthquakes because they have parking
on all or part of the first floor, or open commercial space on
that first floor. These buildings typically have outside walls
with large openings due to garage doors and display windows,
as well as few internal walls, making this story "weak" or
"soft" and likely to lean or fall over in earthquakes.
Because of improvements in recent building codes for new
construction, these soft-story buildings were likely built
prior to 1990 and the most problematic buildings were built
prior to 1980. They also are more likely to be a problem if
they have wood-framing in the walls of the first floor
(whether or not it is covered by stucco)."
2)As indicated by the1999 ABAG report, "Preventing the
Nightmare", current financial incentive programs are having a
negligible impact on retrofit work. According to the author,
the goal of AB 1755 is to provide homeowners, who wish to make
seismic improvements to their homes, with a financing option
that removes much of the upfront expense. By making it easier
for homeowners to protect their homes in the event of an
earthquake, the author believes that this measure will
increase public safety in the event of an earthquake, as well
as reduce the number of homes that are destroyed in the next
big earthquake. AB 1755 builds upon the already existing
authority for local agencies to establish a contractual
assessment area thereby allowing homeowners the option to
finance seismic retrofitting using long-term loans repaid
through property tax assessments.
3)AB 811 (Levine), Chapter 159, Statutes of 2008, proposed to
further the public interest
of addressing climate change through energy conservation efforts
by authorizing cities
to provide up-front financing to property owners to install
solar or other renewable energy-generating devices or make
specified energy efficiency improvements to their properties
through a system of contractual assessments. Prior to AB 811,
contractual assessments were only authorized for certain types
of public works projects. Under contractual assessments, the
property owner or owners within a designated area choose to
assess themselves for the cost of energy efficiency
improvements or public works projects (i.e., under grounding
of power lines or installation of streetlights). The local
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government then provides the
up-front funds for the project, and the property owners pay an
annual assessment until those funds, plus interest, are
repaid. The underlying purpose is to create a means by which
a project that provides both a public benefit and an
incidental benefit to particular property owners can be
financed without imposing the cost on property owners in other
parts of the city who derive no benefit.
AB 474 (Blumenfield), Chapter 444, Statutes of 2009, added
water efficiency improvements to the list of improvements that
can be paid for through a contractual assessment between a
willing property owner and a public agency.
4)Support Arguments : According to the sponsor, the City of
Oakland, the costs typically associated with seismically
retrofitting a house in order to ensure safety can be
extremely high. For many homeowners the cost of retrofitting
a home serves as the primary barrier to having the needed
repairs. The sponsor believes that we must provide incentives
to residents to ensure they are as prepared as possible.
Contractual assessments, as authorized in
AB 1755, can help to lessen the initial financial burden of
making such improvements. Supporters believe that given the
recent earthquakes in Chile and Haiti, California needs to
ensure that all of its structures are well prepared to handle
the next major earthquake.
Opposition Arguments : Opposition could argue that this
measure adds yet another improvement to the laundry list of
improvements that a local government can finance through
contractual assessments; the Committee may wish to consider
whether it is prudent to continue to authorize local
governments to become a glorified bank to help pay for on-site
property improvements. The Committee may also wish to
consider if it would be wise to place some type of cap on the
amount of contractual assessments a local government may enter
into at any one time in order to reduce the financial risk for
the local agency.
5)Technical Amendment : In order to clarify that contractual
assessments are not used only
for seismic safety improvements, the author may wish to amend
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Section 1 of the bill to read as follows:
"Section 1. The Legislature finds and declares that AB
1755 of the 2010 Session shall be known as the Seismic
Safety Finance Act."
6)AB 1755 is similar to AB 2182 (Huffman), which is currently
pending in the Committee.
As these contractual assessment bills move forward, each will
need to be amended to avoid chaptering out issues.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Oakland [SPONSOR]
American Council of Engineering Companies
Association of Bay Area Governments (support in concept)
Opposition
None on file
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958