SB 602: Seismic safety: California Earthquake Authority.

Existing law establishes the California Earthquake Authority, which is authorized to transact insurance in the state as necessary to sell policies of basic residential earthquake insurance, as provided. Existing law provides that a public purpose will be served by a voluntary contractual assessment program that provides the legislative body of a public agency with the authority to finance the installation of seismic strengthening improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property. For purposes of financing the installation of seismic strengthening improvements, public agency means a city, county, or city and county.

This bill would include the California Earthquake Authority as part of the definition of public agency for this purpose.

The Improvement Bond Act of 1915, 1915 provides authority for the legislative body of any city to determine that bonds may be issued to pay for specified works of improvement.

This bill would include the California Earthquake Authority as part of the definition of city or municipality for purposes of this act.

Existing law authorizes the Earthquake Loss Mitigation Fund, a continuously appropriated fund, to be applied to supply grants and loans or loan guarantees to dwelling owners who wish to retrofit their homes to protect against earthquake damage.

This bill would also authorize the money in the fund to be used to fund seismic strengthening improvements permanently fixed to residential, commercial, industrial, agricultural, or other real property, property and an account for related loan losses, and to acquire debt obligations issued to fund these seismic strengthening improvements, thereby making an appropriation. The bill would also require the California Earthquake Authority to establish a loan loss reserve account in the fund for the deposit of moneys to be expended for loan losses incurred in connection with financing seismic strengthening improvements.

This bill would (1) revise or waive certain notice and reporting requirements generally applicable to contractual assessments for contractual assessments that finance seismic strengthening improvements, (2) absent specified conditions, presume statewide scope of any California Earthquake Authority programs of contractual assessments for seismic strengthening improvements, and (3) provide for payment of assessments pursuant to the contractual payment schedule for any California Earthquake Authority program, notwithstanding any bonds secured by those assessments. The bill would require the California Earthquake Authority, prior to entering into a voluntary contractual assessment with a property owner to finance seismic strengthening improvements, to disclose the terms and conditions of the voluntary contractual assessment, and to notify the property owner, in writing, that he or she may be required to pay the remaining principal balance of the voluntary contractual assessment when he or she refinances or sells the property. The bill would specify that the California Earthquake Authority shall require each property owner to sign a document acknowledging his or her receipt of this written disclosure. The bill would also require that seismic strengthening improvements that are permanently fixed to real property and that are financed pursuant to the program comply with all applicable state and local building standards.