BILL ANALYSIS
AB 2746
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2746 (Blakeslee)
As Amended June 15, 2010
2/3 vote
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|ASSEMBLY: |74-0 |(May 6, 2010) |SENATE: |34-0 |(August 18, |
| | | | | |2010) |
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Original Committee Reference: INS.
SUMMARY : Authorizes the California Earthquake Authority (CEA)
to contract for the services of a chief mitigation officer and
describes the general duties of that officer.
The Senate amendments :
1)Require the chief mitigation officer of the CEA to file
financial disclosure statements with Fair Political Practices
Commission.
2)Provides that no reimbursement is required by this bill
because it creates a new crime or infraction (i.e., the bill
contains a crimes and infractions disclaimer).
EXISTING LAW :
1)Authorizes the governing board of CEA to conduct the affairs
of the CEA and specifies its powers. Among its powers are to:
employ or contract with officers and employees to administer
the CEA, retain outside actuarial and geological
professionals, invest moneys, obtain reinsurance, issue bonds,
and employ bond counsel and financial consultants in
connection with the issuance of bonds.
2)Specifies that the CEA may contract for the services of a
chief executive officer (CEO), a chief financial officer
(CFO), and an operations manager. Additionally, the CEA may
contract for the services of reinsurance intermediaries,
financial market underwriters, modeling firms, a computer
firm, an actuary, an insurance claims consultant, counsel, and
private money managers. For these purposes, the CEA is not
considered a state agency or other public agency.
AS PASSED BY THE ASSEMBLY , this bill:
AB 2746
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1)Authorized the CEA to contract for the services of a chief
mitigation officer.
2)Required the governing board of the CEA to establish the
duties of the chief mitigation officer which shall include the
following:
a) Program activities that mitigate against seismic risk
that will help homeowners, other property owners including
landlords with smaller holdings, and the general public;
b) Collaboration with academic institutions, nonprofit
entities, and commercial business entities in joint efforts
to conduct mitigation-related research and educational
activities, and conduct program activities to mitigate
against seismic risk;
c) Programs to provide financial assistance in the form of
loans, grants, rebates, or other financial incentives to
help mitigate against seismic risk, including structural
and contents retrofitting of residential structures; and,
d) Collaboration and joint programs with local, state, and
federal agencies that may further California's disaster
preparedness, protection, and mitigation goals.
3)Authorized the CEA to accept grants and gifts of real or
personal property and services for the Earthquake Loss
Mitigation Fund or the related residential retrofit program
from federal, state, and local government sources and private
sources.
FISCAL EFFECT : No direct fiscal impact. The CEA is a
privately financed, publicly managed agency with 25 civil
service positions and a handful of temporary and exempt
positions.
COMMENTS :
1)The purpose of this bill is to authorize the CEA to contract
for the services of a chief mitigation officer with specified
duties.
2)According to the Working Group on California Earthquake
Probabilities, there is a 99% chance of a magnitude 6.7 or
AB 2746
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greater earthquake striking California within the next 30
years. The author states that according to CEA estimates, a
region such as Los Angeles could experience $100 billion in
residential property losses. In San Francisco, 80% of the
weakest wood-framed buildings (an estimated 2,000 buildings)
are expected to collapse or become damaged beyond repair in a
large earthquake (7.2 magnitude). Agencies advise that an
effective retrofit program would dramatically reduce this
damage.
The CEA has recommended the establishment of a chief mitigation
officer position to enhance the organization's mitigation
efforts and effectively utilize the Loss Mitigation Fund to
help protect California. Currently, this fund has
approximately $12 million available to provide loans to
retrofit homes but relatively few homeowners have taken out
these loans.
3)Effective use of the Loss Mitigation Fund by the chief
mitigation officer will assist homeowners to retrofit their
homes and prepare for a major earthquake. Without appropriate
mitigation retrofits, experts estimate that tens to hundreds
of thousands of homes in high population centers like Southern
California and San Francisco will be destroyed, leaving
thousands of families homeless. Since the Chief Mitigation
Officer's salary will be subject to the 3% operating expense
ceiling, just as the CEO's and the CFO's, there will be no
increase in the cost to rate payers.
4)In 2009, the Insurance Committee and the Legislature approved
AB 43 (Blakeslee) which proposed to create the position of
chief mitigation officer in the CEA and to eliminate a cap on
the number of civil service employees that could be employed
by the CEA. The Governor vetoed AB 43 and stated that he was
supportive of establishing the chief mitigation officer in the
CEA, and that his veto was based on his opposition to
eliminating the limit on the number of civil service employees
in the CEA. AB 2746 only contains the chief mitigation
officer provision.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
FN: 0005655