BILL ANALYSIS �
AB 184
Page 1
ASSEMBLY THIRD READING
AB 184 (Swanson)
As Introduced January 25, 2011
Majority vote
LOCAL GOVERNMENT 8-1
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|Ayes:|Smyth, Alejo, Bradford, | | |
| |Campos, Davis, Gordon, | | |
| |Hueso, Norby | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight | | |
| | | | |
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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.
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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.
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
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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
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.
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13)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
consultations in the report to be submitted to the legislative
body of the city.
14)Requires a legislative body to publish notice of a hearing
regarding contractual assessments.
15)Defines "city" for purposes of these sections as a city,
county, or city and county.
16)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.
17)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.
18)Prohibits a public agency from permitting a property owner to
participate in a contractual assessment program if the total
amount of annual property tax and assessments exceeds 5% of
the property's market value.
19)Specifies that nothing in statute shall be construed to void
or otherwise release a property owner from the contractual
obligations incurred by a contractual assessment on a
property, particularly in the event that the total amount of
annual property taxes exceeds 5% of a property's market value
after the property owner has entered into a contractual
assessment.
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20)Clarifies that a public agency report shall include a
description of its criteria for underwriting requirements of a
property owner.
21)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 : In a major (magnitude 7 or so) earthquake on the
Hayward fault, the 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.
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)."
As indicated by the 1999 ABAG report, "Preventing the
Nightmare," current financial incentive programs are having a
negligible impact on retrofit work. According to the author,
the goal of this bill 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
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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. This bill 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.
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 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.
This bill is identical to AB 1755 (Swanson, 2010) that was
vetoed by Governor Schwarzenegger. In his veto message the
Governor stated that he does "not support expanding contractual
assessment programs to these types of property improvements."
Support arguments: According to the City of Oakland (City), the
costs typically associated with seismically retrofitting a house
in order to ensure safety can be extremely high. For many
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homeowners the cost of retrofitting a home serves as the primary
barrier to having the needed
repairs. The City believes that we must provide incentives to
residents to ensure they are as prepared as possible.
Contractual assessments, as authorized in this bill, can help to
lessen the initial financial burden of making such improvements.
Supporters believe that given the recent earthquakes in Chile,
Haiti and Japan, 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 Legislature 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 Legislature 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.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
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