SB 1041: Voluntary contractual assessments: wildfire safety improvements.

5898.16.

(a) A public agency shall not permit a property owner to participate in any program established pursuant to this chapter for the purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4 if any of the following apply:

(1) The property owner’s participation would result in the total amount of the annual property taxes and assessments exceeding 5 percent of the property’s market value, as determined at the time of approval of the property owner’s contractual assessment.

(2) The property does not comply with the conditions specified in paragraphs (1) to (5), inclusive, and paragraph (8), and, in addition, for properties with energy efficiency improvements specified under Section 5898.20 of this code and paragraph (7) of subdivision (a) of Section 26063 of the Public Resources Code.

(b) A public agency shall not permit the property owner to participate in any program established pursuant to this chapter for the purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4 unless the property owner is given the right to cancel the contractual assessment without penalty or obligation, consistent with the following:

(1) (A) The property owner shall receive the right to cancel document set forth below or a substantially similar document that displays the same information in a substantially similar format. The document shall be provided to the property owner as a printed copy unless the property owner agrees to an electronic copy.

(B) References to “third” in the notice to cancel document set forth in subparagraph (A) shall be changed to “fifth” for a property owner who is a senior citizen.

(C) The five-day right to cancel added by the act that added subparagraph (B) to this paragraph shall apply to a contractual assessment entered into on or after January 1, 2021.

(2) The property owner is deemed to have given notice of cancellation at the moment that the property owner sends the notice by mail, email, or fax or at the moment that the property owner otherwise delivers the notice, as applicable.

(c) This section only applies to a property owner who seeks to participate in a program established pursuant to this chapter for the purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4 for a residential property with four or fewer units.

(d) For the purposes of this section, the following definitions apply:

(1) “Property owner” shall include all owners of record.

(2) “Senior citizen” means an individual who is 65 years of age or older.

5898.17.

(a) The disclosure set forth below, or a substantially equivalent document that displays the same information in a substantially similar format, shall be completed and delivered to a property owner before the property owner consummates a voluntary contractual assessment described in this chapter for purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4, or a special tax described in Section 53328.1 of the Government Code. The disclosure shall be provided to the property owner as a printed paper copy in no smaller than 12-point type, unless the property owner opts out of receiving a printed paper copy in writing by signing a printed paper document. A property owner who opts out of receiving a printed paper copy of the disclosure shall be provided with an electronic copy in accordance with the Uniform Electronic Transactions Act (Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code). A sample of the disclosure set forth below shall be maintained on a public internet website available to property owners.

(b) (1) This section only applies to disclosure to a property owner who seeks to participate in a program established pursuant to this chapter for the purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4 for a residential property with four or fewer units.

(2) References to “three” and “third” in the document set forth in paragraph (1) shall be changed to “five” and “fifth,” respectively, for a property owner who is a senior citizen.

(3) The five-day right to cancel added by the act that added paragraph (2) to this subdivision shall apply to a contractual assessment entered into on or after January 1, 2021.

(c) A public agency or other party to a voluntary contractual assessment described in this chapter for the purposes specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4, or a special tax described in Section 53328.1 of the Government Code shall not make any monetary or percentage representations of increased value to a property owner regarding the effect the financed improvements will have on the market value of the property unless that public agency or other party derives its estimates of the market value using one of the following:

(1) An automated valuation model, which is a computerized property valuation system that is used to derive a real property value.

(2) A broker’s price opinion conducted by a real estate broker licensed pursuant to Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code.

(3) An appraisal conducted by a state licensed real estate appraiser licensed pursuant to Part 3 (commencing with Section 11300) of Division 4 of the Business and Professions Code.

(d) For purposes of this section, “property owner” shall include all owners of record.

(e) For purposes of this section, “senior citizen” means an individual who is 65 years of age or older.

5899.4.

(a) (1) It is the intent of the Legislature to provide homeowners and businesses with an affordable way to finance improvements to their homes and buildings that make those facilities more resistant to wildfire by permitting voluntary individual efforts to improve the wildfire resilience and safety of those facilities. The Legislature further intends that this chapter should be used to finance the installation of wildfire safety improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property.

(2) The upfront cost of making residential, commercial, industrial, agricultural, or other real property more resistant to wildfire prevents many property owners from making those improvements. To make those improvements more affordable and to promote the installation of wildfire safety improvements, it is necessary to authorize an alternative procedure for authorizing assessments to finance the cost of wildfire safety improvements.

(3) A public purpose will be served by a voluntary contractual assessment program that provides the legislative body of any public agency with the authority to finance the installation of wildfire safety improvements that are permanently fixed to residential, commercial, industrial, agricultural, or other real property.

(b) For purposes of this section:

(1) For the purpose of financing the installation of wildfire safety improvements, “public agency” means a city, county, or city and county. The definition of “city” in Section 5005 shall not apply to this paragraph.

(2) “Wildfire safety improvements” means permanent wildfire resilience and safety improvements fixed to residential, commercial, industrial, agricultural, or other real property. Wildfire safety improvements include, but are not limited to, any improvements identified by the Department of Forestry and Fire Protection and improvements that contribute to the defensible space Zones 1 and 2 of a property, which includes the space between 0 and 100 feet from each side and from the front and rear of the structures, as may be identified by the Department of Forestry and Fire Protection from time to time, that can be fixed to a building or structure. As used in this section, a wildfire safety improvement would include, but not be limited to, a Class A fire-rated roof, enclosed eaves, fire-resistant vents, and multipane windows, including dual pane windows, or functional shutters, which when closed, cover the entire window and do not have openings. As used in this section, wildfire safety improvements that contribute to defensible space do not include brush clearing or other improvements that are temporary in nature unless they are necessary as part of the installation or acquisition of another wildfire safety improvement. A voluntary contractual assessment that finances a wildfire safety improvement shall not be eligible for a waiver of the requirements of paragraph (1) of subdivision (b) of Section 22687 of the Financial Code pursuant to subdivision (e) of Section 22687 of the Financial Code. In order to qualify under this paragraph, a wildfire safety improvement shall be fixed to an existing building or structure, and shall not be used as a part of a project to construct a new home or to rebuild or reconstruct a home that was destroyed or damaged in a fire. A voluntary contractual assessment for wildfire safety improvements entered into pursuant to this section may be used to acquire or construct wildfire safety improvements in connection with the rebuilding or reconstruction of property if the wildfire safety improvements are in addition to or an improvement to, and were not part of, the property as it existed immediately prior to the destruction or damage to the property by fire. property, including:

(c) Any public agency that has established a PACE program in accordance with Section 5898.20, 5899, or 5899.3, or a special tax described in Section 53328.1 of the Government Code, may enter into voluntary contractual assessments with property owners to finance the installation of wildfire safety improvements that are permanently fixed to real property pursuant to this chapter.

(e) For purposes of the report required pursuant to Section 5898.22, relating to a voluntary contractual assessment program for wildfire safety improvements, the designated public agency official shall satisfy the requirements of paragraph (1) of subdivision (c) of Section 5898.22 by identifying the types of wildfire safety improvements that may be financed through the use of contractual assessments.

(f) Notwithstanding any other provision of this chapter, upon the written consent of an authorized public agency official, the proposed arrangements for financing the program pertaining to the installation of wildfire safety improvements that are permanently fixed to real property may authorize the property owner to purchase directly the related equipment and materials for the installation of wildfire safety improvements and to contract directly for the installation of wildfire safety improvements that are permanently fixed to the property owner’s residential, commercial, industrial, agricultural, or other real property.

(g) It is the responsibility of the property owner to contact the property owner’s insurance provider to determine whether the wildfire safety improvement to be financed by the voluntary contractual assessment is covered by the property owner’s insurance plan and whether that improvement will impact the insurance rate.

5902.

For purposes of this chapter:

(a) “Assessment contract” means an agreement entered into between all property owners of record on real property and a public agency in which, for voluntary contractual assessments imposed on the real property, the public agency provides a PACE assessment for the installation of one or more efficiency improvements on the real property in accordance with a PACE program, specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4, or a special tax described in Section 53328.1 of the Government Code.

(b) “Authorized representative” means an attorney-in-fact, as defined in Section 4014 of the Probate Code, or conservator of the estate, as defined in Section 2400 of the Probate Code, of the property owner.

(c) “Efficiency improvement” means one or more permanent improvements fixed to real property.

(d) “PACE assessment” means a voluntary contractual assessment, voluntary special tax, or special tax, as described in subdivisions (a), (b), and (c) of Section 26054 of the Public Resources Code.

(e) “PACE program” means a program in which financing is provided for the installation of efficiency improvements on real property and funded through the use of property assessments, as well as other program components defined in this section, established pursuant to any of the following:

(1) Chapter 29 (commencing with Section 5898.10) of Part 3 of this code.

(2) The Mello-Roos Community Facilities Act of 1982 (Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code).

(3) A charter city’s constitutional authority under Section 5 of Article XI of the California Constitution.

(f) “Program administrator” means an entity administering a PACE program on behalf of, and with the written consent of, a public agency.

(g) “Property owner” means all property owners of record on the property subject to the PACE assessment.

(h) “Public agency” means a city, including a charter city, county, city and county, municipal utility district, community services district, community facilities district, joint powers authority, sanitary district, sanitation district, or water district, as defined in Section 20200 of the Water Code, that has established or participates in a PACE program, and utilizes a program administrator.

5913.

(a) (1) Before a property owner executes an assessment contract the program administrator shall do the following:

(A) Make an oral confirmation that at least one owner of the property has a copy of the contract assessment documents required by paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4, or Section 53328.1 of the Government Code, as applicable, with all the key terms completed, the financing estimate and disclosure form specified in Section 5898.17, and the right to cancel form specified in Section 5898.16, with hard copies available upon request.

(B) Make an oral confirmation of the key terms of the assessment contract, in plain language, with the property owner on the call or to a verified authorized representative of the owner on the call and shall obtain acknowledgment from the property owner on the call to whom the oral confirmation is given.

(2) The oral confirmation required pursuant to paragraph (1) shall include, but is not limited to, all of the following information:

(A) The property owner on the call has the right to have other persons present for the call, and an inquiry as to whether the property owner would like to exercise the right to include anyone else on the call. This shall occur at the onset of the call, after the determination of the preferred language of communication.

(B) The property owner on the call is informed that they should review the assessment contract and financing estimate and disclosure form with all other owners of the property.

(C) The efficiency improvement being installed is being financed by a PACE assessment.

(D) The total estimated annual costs the property owner will have to pay under the assessment contract, including applicable fees.

(E) The total estimated average monthly amount of funds the property owner would have to save in order to pay the annual costs under the PACE assessment, including applicable fees.

(F) That the county annual secured property tax bill, which will include the installment of the PACE lien, will be mailed by the county tax collector no later than November 1 each year, and that if the lien is recorded after the fiscal year closes but before the bill is mailed, the first installment may not appear on the county tax bill until the following year.

(G) The term of the assessment contract.

(H) That payments on the assessment contract will be made through an additional annual assessment on the property and paid either directly to the county tax collector’s office as part of the total annual secured property tax bill, or through the property owner’s mortgage impound account, and that if the property owner pays taxes through an impound account, the property owner should notify the property owner’s mortgage lender to discuss adjusting the monthly mortgage payment by the estimated monthly cost of the PACE assessment.

(I) That the property will be subject to a lien during the term of the assessment contract and that the obligations under the assessment contract may be required to be paid in full before the property owner sells or refinances the property.

(J) That the property owner has disclosed whether the property has received or is seeking additional PACE assessments and has disclosed all other PACE assessments or special taxes that are or about to be placed on the property, if known to and understood by the property owner.

(K) That any potential utility savings are not guaranteed, and will not reduce the assessment payments or total assessment amount.

(L) That the program administrator and contractor do not provide tax advice, and that the property owner should seek professional tax advice if the property owner has questions regarding tax credits, tax deductibility, or of other tax impacts on the PACE assessment or assessment contract.

(M) That if that property tax payment is delinquent within the fiscal year, the county tax collector will assess a 10-percent penalty and may assess related costs, as required by state law. A delinquent payment also subjects the property to foreclosure. If the delinquent payment continues past June 30 of a given year and defaults, the county tax collector will assess penalties at the rate of 1 ½ percent per month (18 percent per year), and the property will continue to be subject to foreclosure and may become subject to the county tax collector’s right to sell the property at auction.

(N) That the property owner has a three-business day right to cancel the assessment contract pursuant to subdivision (b) of Section 5898.16, and that canceling the assessment contract may also cancel the home improvement contract under Section 5940.

(O) That it is the responsibility of the property owner to contact the property owner’s home insurance provider to determine whether the efficiency improvement to be financed by the PACE assessment is covered by the property owner’s insurance plan.

(P) That the property owner may repay an amount owed pursuant to an assessment contract before the date that amount is due under the contract without early repayment penalty.

(b) The program administrator shall comply with the following when giving the oral confirmation described in subdivision (a):

(1) The program administrator shall record the oral confirmation in an audio format in accordance with applicable laws.

(2) The program administrator may not comply with the requirement in subdivision (a) through the use of a prerecorded message, or other similar device or method.

(3) Recording of an oral confirmation shall be retained by the program administrator for a period of at least five years from the time of the recording.

(c) The provisions of this section shall be in addition to the documents required to be provided to the property owner under Sections 5898.16 and 5898.17.

(d) At the commencement of the oral confirmation, the program administrator shall ask if the property owner on the call would prefer to communicate during the oral confirmation primarily in a language other than English that is specified in Section 1632 of the Civil Code. If the preferred language is supported by the program administrator, the oral confirmation shall be given in that primary language, except where the property owner on the call chooses to communicate through the property owner’s own interpreter. If the preferred language is not supported and an interpreter is not chosen by the property owner on the call, the PACE assessment transaction shall not proceed. For purposes of this subdivision, “the property owner’s own interpreter” means a person, who is not a minor, is able to speak fluently and read with full understanding both the English language and any of the languages specified in Section 1632 of the Civil Code, and who is not employed by, and whose services are not made available through, the program administrator, the public agency, or the contractor.

(e) (1) Beginning on January 1, 2019, if the oral confirmation was conducted primarily in a language other than English that is specified in Section 1632 of the Civil Code, the program administrator shall deliver in writing the disclosures and contract or agreement required by law, including, but not limited to, the following:

(A) Assessment contract documents specified in paragraph (2) of subdivision (a) of Section 5898.20 or Section 5899, 5899.3, or 5899.4, or a special tax described in Section 53328.1 of the Government Code.

(B) The financing estimate and disclosure form specified in Section 5898.17.

(C) The right to cancel form specified in Section 5898.16.

(2) Before the execution of any contract or agreement described in paragraph (1), the program administrator shall deliver a translation of the disclosures, contract, or agreement in the language in which the oral confirmation was conducted, that includes a translation of every term and condition in that contract or agreement.

5954.

(a) For each PACE program that it administers, a program administrator shall submit a report to the public agency no later than February 1 for the activity that occurred between July 1st through December 31st of the previous year, and another report no later than August 1 for the activity that occurred between January 1st through June 30th of that year. Those reports shall contain the following information, along with all methodologies and supporting assumptions or sources relied upon in preparing the report:

(1) The number of PACE assessments funded, by city, county, and ZIP Code.

(2) The aggregate dollar amount of PACE assessments funded, by city, county, and ZIP Code.

(3) The average dollar amount of PACE assessments funded, by city, county, and ZIP Code.

(4) The categories of installed efficiency improvements whether energy or water efficiency, renewable energy, wildfire safety improvements, or seismic improvements, and the percentage of PACE assessments represented by each category type, on a number and dollar basis, by city, county, and ZIP Code.

(5) The definition of default used by the program administrator.

(6) For each delinquent assessment:

(A) The total delinquent amount.

(B) The number and dates of missed payments.

(C) ZIP Code, city, and county in which the underlying property is located.

(7) For each defaulted assessment:

(A) The total defaulted amount.

(B) The number and dates of missed payments.

(C) ZIP Code, city, and county in which the underlying property is located.

(D) The percentage the defaults represent of the total assessments within each ZIP Code.

(E) The total number of parcels defaulted and the number of years in default for each property.

(8) The estimated total amount of energy saved, and the estimated total dollar amount of those savings by property owners by the efficiency improvements installed in the calendar year, by city, county, and ZIP Code. In addition, the report shall state the total number of energy savings improvements, and number of improvements installed that are qualified for the Energy Star program of the United States Environmental Protection Agency, including the overall average efficiency rating of installed units for each product type.

(9) The estimated total amount of renewable energy produced by the efficiency improvements installed in the calendar year, by city, county, and ZIP Code. In addition, the report shall state the total number of renewable energy installations, including the average and median system size.

(10) The estimated total amount of water saved, and the estimated total dollar amount of such savings by property owners, by city, county, and ZIP Code. In addition, the report shall state the total number of water savings improvements, the number of efficiency improvements that are qualified for the WaterSense program of the United States Environmental Protection Agency, including the overall average efficiency rating of installed units for each product type.

(11) The estimated amount of greenhouse gas emissions reductions.

(12) The estimated number of jobs created.

(13) The average and median amount of annual and total PACE assessments based on ZIP Code, by city, county, and ZIP Code.

(14) The number and percentage of homeowners over 60 years old by city, county, and ZIP Code.

(b) All reports submitted pursuant to this section shall include only aggregate data, and shall not include any nonpublic personal information.

(c) A public agency that receives a report pursuant to this section shall make the data publicly available on its internet website.

(d) This section does not limit another governmental or regulatory entity from establishing reporting requirements.