BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1755|
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THIRD READING
Bill No: AB 1755
Author: Swanson (D), et al
Amended: 8/2/10 in Senate
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 4-1, 6/30/10
AYES: Cox, Kehoe, DeSaulnier, Price
NOES: Aanestad
ASSEMBLY FLOOR : 55-18, 5/6/10 - See last page for vote
SUBJECT : Seismic Safety Finance Act
SOURCE : City of Oakland
DIGEST : This bill authorizes the use of contractual
assessments to finance the installation of seismic
strengthening improvements that are permanently fixed to
residential, commercial, industrial, agricultural, or other
real property. This bill limits the total annual property
tax and assessments from exceeding five percent of the
market value of the property.
ANALYSIS : A benefit assessment is an involuntary charge
that property owners pay for a public improvement or
service that provides a special benefit to their property.
The amount of the assessment is directly related to the
amount of the benefit their property receives. Benefit
assessments can finance public projects like flood control,
street improvement, streetlights, and public landscaping.
CONTINUED
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As an alternative to benefit assessments, and only with the
free and willing consent of affected property owners,
public agencies can use "voluntary contractual assessments"
to finance:
1. Public improvements to developed parcels (SB 837
[McCorquodale], Chapter 1388, Statutes of 1987).
2. Renewable energy sources or energy efficiency
improvements that are permanently fixed to real property
(AB 811 [Levine], Chapter 159, Statutes of 2008).
3. Water efficiency improvements that are permanently fixed
to real property (AB 474 [Blumenfield], Chapter 444,
Statutes of 2009).
To use voluntary contractual assessments, a public agency's
legislative body must adopt a resolution, which:
1. Determines that it would be convenient, advantageous,
and in the public interest to designate an area within
which officials and property owners may enter into
contractual assessments and make related financing
arrangements.
2. Identifies the kinds of public works which may be
financed.
3. Describes the area where contractual assessments may be
used.
4. Describes the proposed financing arrangements, including
criteria for determining the creditworthiness of a
property owner.
5. States the time and place for a public hearing.
6. Directs an official to prepare a detailed report about
the contractual assessment program and consult with the
county auditor and county controller regarding fees.
The report on the proposed assessment program must contain:
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1. A map of the area where contractual assessments will be
offered.
2. A draft contract specifying the terms and conditions.
3. A list of the types of facilities and improvements which
may be financed.
4. The official authorized to enter into contractual
assessments on behalf of the county or city.
5. The maximum aggregate dollar amount of contractual
assessments.
6. A method for prioritizing requests from property owners
for financing.
7. A plan for raising a capital amount required to pay for
work performed pursuant to contractual assessments.
8. Information about the county auditor's and county
controller's fees.
The legislative body must give written notice to all water
or electricity providers within a proposed area where
voluntary contractual assessments will be offered. After
holding a public hearing, the legislative body may adopt a
resolution confirming the program as detailed in the
report, may confirm a modified version of the report, or
may abandon the proceedings.
The legislative body must designate an office to:
1. Prepare the annual roll of assessment obligations on
property subject to a voluntary contractual assessment.
2. Establish procedures for responding to inquiries
concerning estimated voluntary contractual assessment
liabilities.
The legislative body must provide for documents to be
recorded with the county recorder, providing notice of a
contractual assessment on real property.
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Local officials can help private property owners pay for
seismic safety improvements with loans and grants from
several sources:
Municipal Improvement Act of 1913 assessments (AB 1700
[Farr], Chapter 18, Statutes of 1992).
General obligation bonds (AB 1001 [Brown], Chapter 658,
Statutes of 1991).
Mello-Roos Act special taxes (SB 27X [Mello], Chapter 29,
Statutes of 1990).
Redevelopment agency funds (AB 3556 [Cortese], Chapter
933, Statutes of 1990).
Local revenue bonds (AB 604 [Rosenthal], Chapter 1602,
Statutes of 1982).
Local officials want to add seismic strengthening
improvements to the types of improvements that can be
financed with voluntary contractual assessments.
This bill authorizes the use of contractual assessments to
finance the installation of seismic strengthening
improvements that are permanently fixed to residential,
commercial, industrial, agricultural, or other real
property.
This bill specifies that, for financing the installation of
seismic strengthening improvements, "public agency" means a
city, county, or city and county.
This bill limits the total annual property tax and
assessments to no more than five percent of the property's
market value.
This bill contains legislative findings and declarations
regarding the need to finance seismic strengthening
improvements using contractual assessments.
This bill also states legislative intent that participation
in an assessment program will not result in a property
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owner being unable to pay the property taxes and
assessments on the property, and further intends that a
property owner shall not be able to participate in any
program established by this bill if participation would
result in the total amount of any annual property taxes and
assessments to exceed five percent of the property's
appraised market value.
Comments
This bill builds upon a substantial body of state law that
lets local officials use public financing to help private
property owners pay for seismic improvements. Unreinforced
masonry buildings and "soft story" buildings with large
open spaces on the ground floor are serious earthquake
hazards. The Association of Bay Area Governments says that
26,000 of Oakland's 163,000 housing units will become
uninhabitable when the Hayward Fault has a major
earthquake. Because commercial loans for earthquake
improvements can be expensive, local officials want to
accelerate retrofit work on vulnerable buildings by loaning
money to private property owners at below-market rates.
This bill provides local officials with another tool to
help property owners pay for structural upgrades that save
lives, protect rescue workers, and reduce economic
disruption after a major earthquake.
Related Legislation
AB 2182 (Huffman), 2009-10 Session, lets local officials
use contractual assessments to finance sewer and septic
improvements.
AB 44 (Blakeslee), 2009-10 Session, lets local officials
use contractual assessments to finance distributed
generation renewable energy systems attached to real
property pursuant to an electricity purchase agreement.
SB 1340 (Kehoe), 2009-10 Session, lets local officials use
contractual assessments to finance electric vehicle
charging infrastructure.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
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SUPPORT : (Verified 8/2/10)
City of Oakland (source)
American Council of Engineering Companies
Association of Bay Area Governments
California Association of Realtors
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Beall, Blakeslee,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Cook, Coto, Davis, De
La Torre, De Leon, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Nava, Nestande, Nielsen, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Skinner, Smyth,
Solorio, Swanson, Torlakson, Torres, Torrico, Tran,
Yamada, John A. Perez
NOES: Anderson, Bill Berryhill, Tom Berryhill, Conway,
DeVore, Fuller, Gaines, Garrick, Hagman, Harkey,
Jeffries, Knight, Logue, Miller, Niello, Silva, Audra
Strickland, Villines
NO VOTE RECORDED: Bass, Block, Gilmore, Mendoza, Monning,
Norby, Vacancy
AGB:mw 8/3/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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