Part 1GENERAL PROVISIONS

Section § 55000

Explanation

This law highlights that many buildings in California are not strong enough to handle predicted earthquake forces, especially residential hotels and commercial buildings where people work or visit. It acknowledges that fixing these structures to meet current earthquake safety standards is important but can be very expensive, making it hard for building owners to afford. To help with this, the law supports the creation of local loan programs that offer long-term, low-interest loans, encouraging owners to make these crucial modifications.

The Legislature finds and declares that there exist throughout the state many buildings which are structurally inadequate to safely withstand seismic forces of the magnitude predicted or determined for their locations by seismic safety elements of local general plans. This problem is particularly acute with respect to residential hotels and with respect to commercial buildings in which employees must work or to which the public is invited. The Legislature further finds and declares that rehabilitation of these buildings to meet current standards of earthquake safety is in the public interest, but that private enterprise will be unable in many cases to meet the high cost of making the necessary modifications without the availability of long-term, low-interest loans for the purpose.
It is, therefore, the intent of the Legislature in enacting this division to authorize establishment of local loan programs to serve this need at the lowest possible cost and upon favorable terms so that owners of eligible buildings will be encouraged to make modifications required to assure structural integrity in the event of an earthquake.
earthquake safety structural integrity seismic forces residential hotels commercial buildings rehabilitation building modifications low-interest loans loan programs earthquake standards seismic safety local general plans public interest building owners structural inadequacy
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55001

Explanation

This section defines key terms used in a division concerning bonds and building safety. "Bonds" are various forms of debt issued by local agencies. An "eligible building" is an existing structure identified as hazardous, with certain exceptions for industrial buildings and some residential and commercial structures. "Eligible costs" encompass all expenses for modifying these buildings to meet safety standards, including both structural and nonstructural expenses. "Financing" refers to loans given by local agencies to cover these costs, secured by property deeds. "Local agency" means any city or county. "Residential hotel" refers to buildings with six or more rooms used as the primary residence for guests, not primarily for transient visitors.

As used in this division:
(a)CA Health and Safety Code § 55001(a)  “Bonds” means bonds, notes, or other evidence of indebtedness issued by a local agency pursuant to Part 2 (commencing with Section 55100) of this division, including bonds issued to refund previously issued bonds or other indebtedness.
(b)CA Health and Safety Code § 55001(b)  “Eligible building” means a building existing on the effective date of this section which is identified as hazardous pursuant to Article 4 (commencing with Section 19160) of Chapter 2 of Part 3 of Division 13, with the exception of the following:
(1)CA Health and Safety Code § 55001(b)(1)  Industrial buildings for assembling, fabricating, manufacturing and processing activities.
(2)CA Health and Safety Code § 55001(b)(2)  Structures subject to the provisions of Part 1.5 (commencing with Section 17910) of Division 13, other than a residential hotel or apartment building containing six or more units or a commercial building containing six or more residential units which is identified as hazardous pursuant to this section.
(c)CA Health and Safety Code § 55001(c)  “Eligible costs” means all costs, including costs of design, preparation, and inspection incurred in making structural or other modifications to an eligible building, which are required in order to meet reconstruction standards established by a local ordinance pursuant to Sections 19162, 19163, and 19163.5, or to mitigate potentially hazardous buildings, as defined by subdivision (a) of Section 8875 of the Government Code including costs of payments required by Section 7265.3 of the Government Code, and including costs necessary to provide for the reasonable safety of the exterior and interior of the eligible building and of interior fixtures and appurtenances. Other eligible costs include nonseismic and nonstructural costs, including, but not limited to, plaster, wallboard, paint, and carpeting, and any other finishes deemed necessary by the local building official to restore an eligible building to its original conditions and suitable for occupancy.
(d)CA Health and Safety Code § 55001(d)  “Financing” means a loan made by the local agency pursuant to this division to the owner of an eligible building for eligible costs and which is secured by a deed of trust or mortgage upon the real property improved thereby.
(e)CA Health and Safety Code § 55001(e)  “Local agency” means a city, county, or city and county.
(f)CA Health and Safety Code § 55001(f)  “Residential hotel” means any building containing six or more guestrooms intended or designed to be used, or which are used, rented, or hired out, to be occupied, or which are occupied, for sleeping purposes by guests, which is also the primary residence of those guests, but does not mean any hotel which is primarily used by transient guests who do not occupy the hotel as their primary residence.
bonds hazardous buildings eligible building financing loans local agency residential hotel eligible costs industrial buildings refunding bonds structural modifications nonstructural costs deed of trust mortgage security primary residence transient guests
(Amended by Stats. 1989, Ch. 756, Sec. 3.)

Section § 55002

Explanation

This law section says that a local agency in California can provide financing to a building owner for certain eligible costs if specific conditions are met. The agency must determine one of three things: the owner can't qualify for private funding, the building would be demolished without the agency's financing, or fixing the building would cause economic hardship to the businesses inside.

The financing must not exceed 80% of the building's current appraised value unless other lienholders agree in writing. Additionally, current lienholders must be informed at least 30 days before the agency votes to provide the financing.

(a)CA Health and Safety Code § 55002(a)  Pursuant to this division, the local agency may provide financing to pay for eligible costs to an owner of an eligible building only if the legislative body of the local agency makes one of the following findings:
(1)CA Health and Safety Code § 55002(a)(1)  The owner to whom financing would be made available pursuant to this division is unable to qualify for or could not afford financing for eligible costs from private lending institutions.
(2)CA Health and Safety Code § 55002(a)(2)  Absent the availability of financing pursuant to this division, the eligible building would be demolished.
(3)CA Health and Safety Code § 55002(a)(3)  Absent the availability of financing pursuant to the division, the costs of modifying the eligible building to meet reconstruction standards, pursuant to Sections 19162, 19163, and 19163.5, or to mitigate potentially hazardous buildings, as defined by subdivision (a) of Section 8875 of the Government Code, would cause severe economic hardship to the businesses in the building.
(b)CA Health and Safety Code § 55002(b)  Financing provided by a local agency pursuant to this division shall not, when combined with existing liens on the property, exceed 80 percent of the current appraised value of the property, as determined by an independent, certified appraiser, unless existing lienholders consent in writing to a higher loan-to-value ratio. Notice of the intention to provide financing to the owner of the property shall be given to existing lienholders of record not less than 30 days prior to any vote of the local agency authorizing the provision of financing to the owner of the property.
local agency financing eligible building costs private lending qualification building demolition prevention economic hardship reconstruction standards hazardous building mitigation loan-to-value ratio appraised property value lienholder consent lienholder notification business economic impact property financing limits independent appraisal financing conditions
(Amended by Stats. 1995, Ch. 385, Sec. 2. Effective January 1, 1996.)

Section § 55002.5

Explanation

This law allows local agencies to provide financial assistance to help pay off or buy out existing loans or mortgages on certain buildings, as long as the new loan doesn't exceed 80% of the property's appraised value. The local agency must set rules to make sure the loan is repaid and require the building owner to have a minimum amount of ownership, or equity, in the property.

Pursuant to this division, the local agency may provide financing to pay for or buy out any existing note or deed of trust which may be a lien against the real property on which an eligible building is situated, not to exceed an 80 percent loan to appraised value ratio. The local agency shall establish rules and regulations to ensure the repayment of the funds being borrowed and shall establish a minimum equity requirement that the owner of the eligible building must have in the property.
local agency financing loan to value ratio appraised value real property lien eligible building minimum equity requirement repayment rules deed of trust mortgage buyout property ownership financial assistance loan repayment existing note property equity
(Added by Stats. 1990, Ch. 378, Sec. 1.)

Section § 55003

Explanation

This law allows local agencies to make agreements with banks or savings and loan associations to help start or manage loans that are approved under this division.

The local agency may contract with state or federally chartered banks or savings and loan associations for originating or servicing loans authorized by this division.
local agency contracts state banks federally chartered banks savings and loan associations loan origination loan servicing authorized loans loan management financial institutions bank agreements loan agreements financial services local agency loans bank servicing loan processing
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55004

Explanation

This law requires local agencies to set rules for managing financing programs. These rules must establish who can borrow, ensuring the program remains financially sound, and focus on older buildings that still have value. They must also outline what to do if borrowers default on payments.

The local agency shall adopt rules and regulations for the administration of the financing program, which shall include, but not be limited to, borrower eligibility criteria designed to assure the fiscal integrity of the financing program while permitting maximum application to existing buildings which have sufficient economic life to warrant the amount of financing required. The regulations shall specify procedures to be followed in the event of default.
local agency rules financing program borrower eligibility fiscal integrity existing buildings economic life amount of financing procedures for default financial management regulations eligible buildings loan default procedures administration of financing
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55005

Explanation

This law outlines the additional powers of a local agency related to financing responsibilities. The agency can make contracts and agreements with other entities, set terms for financial instruments like mortgages, and hire necessary professionals for advice. It can also provide technical advice in financing matters, get insurance for its assets, and set fees for its services. Additionally, the agency has the power to borrow money by issuing bonds and do various things necessary to perform its duties under this law.

For the purposes of this division, the local agency shall have the following powers in addition to any other powers granted by this division:
(a)CA Health and Safety Code § 55005(a)  To make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this division with any governmental agency, private corporation, or other entity or individual.
(b)CA Health and Safety Code § 55005(b)  To determine the terms and conditions of any mortgage instrument, deed of trust, or promissory note used or executed in conjunction with financing pursuant to this division.
(c)CA Health and Safety Code § 55005(c)  To employ architects, engineers, attorneys, accountants, construction and financial experts, and other advisers, consultants, and agents as may be necessary in its judgment.
(d)CA Health and Safety Code § 55005(d)  To provide advice, technical information, and consultative and technical service in connection with financing pursuant to this division.
(e)CA Health and Safety Code § 55005(e)  To procure insurance against any loss in connection with its property and other assets, including mortgages and deeds of trust, in the amounts and from insurers as it deems desirable.
(f)CA Health and Safety Code § 55005(f)  To establish, revise from time to time, and charge and collect fees and charges in connection with financing provided by the local agency.
(g)CA Health and Safety Code § 55005(g)  To borrow money and issue bonds, as provided in this division.
(h)CA Health and Safety Code § 55005(h)  To do any and all things necessary or convenient to the exercise of other powers under this division.
local agency powers financial contracts mortgage terms professional hiring financial advice insurance procurement fee collection bond issuance borrowing money technical services real estate financing legal and financial experts consultative services property insurance asset management
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55006

Explanation

This section states that any financing provided under this division must have an interest rate that only covers the necessary costs. Specifically, it should be enough to pay the interest on bonds and cover the administrative costs of the local agency involved.

The interest rate on financing provided pursuant to this division shall be sufficient and shall be limited to the amount necessary to pay the interest on the bonds issued therefor and to defray costs of administration incurred by the local agency pursuant to this division.
financing interest rate bonds interest administrative costs local agency cost coverage bond financing interest limitations financing limits local agency administration interest on bonds cost defrayal administration expenses bond-related costs financial provisions rate sufficiency
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55007

Explanation

This law allows a local agency to run a financing program for specific purposes alongside a separate residential rehabilitation financing program. Despite any other laws, the agency can issue a single type of bond that serves both programs, and this bond will be secured by the terms set in both legal divisions mentioned.

The local agency may conduct a financing program under this division in tandem with a residential rehabilitation financing program under Part 13 (commencing with Section 37910) of Division 24 and may in such case, notwithstanding any other provision of law, issue one form of bond, to be jointly secured as provided in both this division and Part 13 (commencing with Section 37910) of Division 24.
local agency financing residential rehabilitation jointly secured bond single bond issuance financing program division cooperation Part 13 Division 24 bond security provisions collaborative financing housing program bond program integration bond security terms
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55008

Explanation

This law states that when a local agency uses its powers as described in this division, it is doing so for the good of the people, aiming to improve their well-being and social conditions. Additionally, the local agency is not required to pay taxes or assessments on any property it owns or income it generates through these activities.

The exercise of the powers specified in this division shall be in all respects for the benefit of the people of the state, for their well-being and prosperity, and for the improvement of their social and economic conditions, and the local agency shall not be required to pay any tax or assessment on any property owned by the local agency under the provisions of this division or upon the income therefrom.
local agency tax exemption property taxes assessment exemption public benefit economic prosperity social improvement income tax relief government property tax-free properties state benefit public well-being
(Added by Stats. 1982, Ch. 1602, Sec. 1.)

Section § 55009

Explanation

This law says that any bonds issued by a local agency are tax-free in California. This means no direct or indirect state taxes will apply to these bonds, any money made from them, or their transfer. However, inheritance and gift taxes are not exempt.

Any bonds issued by the local agency under the provisions of this division, their transfer, and the income therefrom shall at all times be free from all direct and indirect taxation of every kind by the state, including all taxes imposed pursuant to Part 11 (commencing with Section 23001) of Division 2 of the Revenue and Taxation Code and imposed by cities, counties, cities and counties, or other political subdivisions of this state, except inheritance and gift taxes.
bonds issued by local agency tax-free bonds income from bonds state tax exemption indirect taxation inheritance taxes gift taxes taxes by cities taxation by counties political subdivisions tax exemptions bond transfers California taxation laws
(Added by Stats. 1982, Ch. 1602, Sec. 1.)