BILL ANALYSIS
SB 1019
Page 1
Date of Hearing: June 16, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 1019 (Correa) - As Amended: April 29, 2010
SENATE VOTE : 31-0
SUBJECT : Subdivisions: release of performance security.
SUMMARY : Extends the January 1, 2011, sunset date to January 1,
2016, for the procedures
for counties and cities to release subdivision performance
securities.
EXISTING LAW :
1)Provides, until January 1, 2011, time limits and procedures by
which a local government must either notify a subdivider or
contractor of any incomplete performance or unsatisfactory
work or release the security given for faithful performance of
the act or agreement.
2)Establishes procedures for the release of performance security
that would provide that a public entity, upon written notice
from the subdivider, would have 45 days to review and comment
or approve the completion of the required work.
3)Requires the public entity to supply a list of all remaining
work to be completed by the subdivider or applicant if the
public entity does not agree that all work has been completed.
4)Requires the subdivider, within 45 days of receipt of the
list, to provide cost estimates
to the public entity for all remaining work and the public
entity would have 45 days to review, comment and approve,
modify, or disapprove those cost estimates.
5)Requires that, upon approval of the list and the cost
estimate, the public entity would be required to release all
performance security except for 200% of the cost estimate of
the remaining work.
6)Establishes procedures for a partial release of performance
security.
SB 1019
Page 2
7)Provides that the subdivider is entitled to a written
statement of completion upon completion and acceptance of all
remaining items by the public entity within 45 days.
8)Requires that, within 45 days of the issuance of the written
statement of completion, the release of the remaining
performance security shall be placed on the agenda of the next
meeting of the legislative body of the public entity for
approval, or within 60 days if the public entity delegates the
authority to release the performance security to a public
official
or other employee.
9)Requires that security securing the payment to the contractor,
his or her subcontractors and to persons furnishing labor,
materials or equipment shall, after passage of the time within
which claims of lien are required to be recorded, and after
acceptance of the work, be reduced to an
amount equal to the total claimed by all claimants for whom
claims of lien have been recorded and noticed, and if no such
claims have been recorded, the security shall be released in
full.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis: Fiscal Impact (in thousands):
Major Provisions 2010-11 2011-12 2012-13 Fund
Mandate potential reimbursable
mandate costs General
COMMENTS :
1)When a builder or developer builds a new subdivision, he or
she provides the local jurisdiction with an improvement or
performance bond to insure that the public improvements (i.e.,
streets, traffic signals, parks, or other infrastructure) that
the developer creates and that will be turned over to the
public are built to the city's or county's specifications and
standards. The bond amount is sufficient to permit the
construction to the specifications. The builder pays a surety
company/insurer a premium to obtain the bond. When the work
is completed, inspected and accepted by the local
SB 1019
Page 3
jurisdiction, the public works director or the local
legislative body releases the bond.
2)AB 1460 (Umberg), Chapter 411, Statutes of 2005, was enacted
establishing procedures and timeframes for the release of
performance securities once homebuilders meet city or county
specifications by completing required public improvements. AB
1460 represented a consensus approach with support from
California's homebuilders and local governments.
AB 1460 contained a January 1, 2011, sunset clause in order to
determine the effectiveness of the program.
3)Support Arguments : Since the 2005 Umberg bill, there have
been no reported problems with the statutory procedures for
releasing subdivision performance securities, nor have
counties and cities filed any claims for state-mandated local
costs. It seems prudent to leave these in place.
Opposition Arguments: None at this time.
REGISTERED SUPPORT / OPPOSITION :
Support
CA Building Industry Association [SPONSOR]
Opposition
None on file
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958