SB1041 - Voluntary contractual assessments: wildfire safety improvements.

Amended IN Senate April 27, 2026 Amended IN Senate March 19, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1041 Introduced by Senator Arreguín February 11, 2026 An act to amend Section 5899.4 of, and to amend and repeal sections Sections 5898.16, 5898.17, 5902, 5913, and 5954 of, and to amend, repeal, and add Section 5899.4 of, the Streets and Highways Code, relating to local government. LEGISLATIVE COUNSEL'S DIGEST SB 1041, as amended, Arreguín. Voluntary contractual assessments: wildfire safety improvements. Existing law authorizes a public agency to establish a contractual assessment program, under which public agency officials and individual property owners may enter into voluntary contractual assessments to finance certain improvements to real property, as specified. To finance those improvements, existing law authorizes a public agency to issue bonds, or to advance its own funds and later sell bonds to reimburse itself for those advances. Under the program, those bonds or advances would be repaid through the voluntary contractual assessments, which constitute a lien against the lots and parcels land, as specified. To establish a contractual assessment program, existing law requires the legislative body of the public agency to adopt a resolution that, among other things, provides certain details of the program, including the kinds of projects and the geographic area within which properties would be eligible for financing under the program. Existing law authorizes a public agency to establish a contractual assessment program to finance certain kinds of improvements that are attached to real property, including energy or water efficiency improvements. This contractual assessment program is commonly known as a Property Assessed Clean Energy (PACE) program. The California Financing Law requires the Commissioner of Financial Protection and Innovation to license and regulate persons who administer a contractual assessment program on behalf of a public agency, as specified. Existing law, the Wildfire Safety Finance Act (act), authorizes the legislative body of any public agency that has accepted the designation of Very High Fire Hazard Severity Zone to create a voluntary contractual assessment program to finance wildfire safety improvements, as specified. The act defines “wildfire safety improvements” as, among other things, permanent wildfire resilience and safety improvements fixed to existing real property. The act prohibits a wildfire safety improvement financed under the act from being 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. Existing law repeals the Wildfire Safety Finance Act on January 1, 2029. This bill would indefinitely extend the operation of certain provisions of the Wildfire Safety Finance Act and would revise the requirements on a legislative body of a public agency to establish a voluntary contractual assessment program under the act. In this regard, the bill would eliminate the requirements that the legislative body accept a designation of Very High Fire Hazard Severity Zone and adopt a resolution establishing the program. Zone. The bill would instead authorize any public agency that has established a PACE program or established a special tax relating to a specified community facilities district to enter into voluntary contractual assessments with property owners to finance the installation of wildfire safety improvements, as defined. The bill would would, until January 1, 2035, modify the projects eligible for financing under the act to, among other things, include wildfire safety improvements in connection with the rebuilding or reconstruction of property that are in addition to or an improvement to the property as it existed immediately before it was destroyed or damaged by fire, consisting of Class A fire-rated roofs, enclosed eaves, fire-resistant vents, multipane windows, and other wildfire safety improvements identified in regulations adopted by the Department of Insurance, as specified. The bill would also also, until January 1, 2035, include 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 that can be fixed to a building or structure, as specified. The bill, until January 1, 2035, would require a program administrator providing wildfire safety improvements to have a hardship program that includes a process for requesting that a program administrator remove a lien if a wildfire destroys the property or improvements. Existing law requires a program administrator to submit, for each PACE program it administers, a biannual report to the public agency that includes certain information, including the number of PACE assessments funded, by city, county, and ZIP Code. This bill would require that report to include the total number of wildfire safety improvements, including the average cost of each product type. The bill would also require the report to include the estimated total amount of savings produced by the wildfire safety improvements installed in the calendar year by city, county, and ZIP Code. The bill would require a program administrator providing wildfire improvements to file a report to the appropriate policy committees of the Legislature by January 1, 2030, that includes the information included in the above-described report provided to the public agency, information relating to complaints regarding the wildfire safety improvements, and a description of the above-described hardship program, as specified. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 5898.16 of the Streets and Highways Code, as amended by Section 11 of Chapter 158 of the Statutes of 2020, is amended to read: 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. Right to Cancel Property Owner: [Owner Full Name],[Phone],[Email] Property Address: [Property Address] Your Right to Cancel: You are entering into a contractual assessment with [Provider] for financing that will result in a lien on the property at [Property Address]. You may cancel this transaction, without cost, on or before midnight on the third business day after whichever of the following events occurs last: (1) The date on which you signed the contractual assessment. (2) The date you received your Financing Estimate and Disclosure. (3) The date you received this notice of your right to cancel. If you cancel the transaction, [Provider], within 20 calendar days after [Provider] receives notice of cancellation, must take the steps necessary to reflect the fact that, if recorded, the lien on your property has been discharged and removed from the tax rolls, and [Provider] must return to you any money you have given in connection with your application, not including the application processing fee. After [Provider] has done the things mentioned above, you must return any money paid to you or on your behalf, whether to your contractor or any other person. All money must be returned to the address below. If you cancel the transaction: ●You will not be charged a cancellation fee; and ●You will be refunded any money you have given, excluding application and processing fees as applicable. To cancel this transaction, you may submit this form to [Provider] in writing at: Provider:__________ Attn:Right to Cancel Notification Email:__________ Fax number:__________ Address:__________ Deadline to Cancel: If you want to cancel this transaction, you must submit this form on or before midnight on the third business day after whichever of the following events occurs last: (1) The date on which you signed the contractual assessment. (2) The date you received your Financing Estimate and Disclosure. (3) The date you received this notice of your right to cancel. You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. If you cancel by mail, fax, or email, you must send the notice no later than midnight of the third business day following the date on which you signed the contractual assessment. If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than midnight on the third business day after whichever of the following events occurs last: (1) The date on which you signed the contractual assessment. (2) The date you received your Financing Estimate and Disclosure. (3) The date you received this notice of your right to cancel. I WISH TO CANCEL Property Owner Date (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. SEC. 2. Section 5898.16 of the Streets and Highways Code, as amended by Section 12 of Chapter 158 of the Statutes of 2020, is repealed. SEC. 3. Section 5898.17 of the Streets and Highways Code, as amended by Section 13.5 of Chapter 158 of the Statutes of 2020, is amended to read: 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. Financing Estimate and Disclosure Notice to Property Owner: Existing law requires that a printer paper copy of this document be provided to you before reviewing and signing, unless you opt out, in writing, to that printed copy by signing a printed paper document. If you opt out of receiving a printed paper copy of this disclosure, an electronic copy will be provided to you. The financing arrangement described below will result in an assessment against your property which will be collected along with your property taxes and will result in a lien on your property. You should read and review the terms carefully, and if necessary, consult with a tax professional or attorney. Customer Service Toll-Free telephone number and email: In the event you have a consumer complaint, questions about your financing obligations related to the contractual assessment or your contractual rights under the terms of this contract, you can contact either this toll-free telephone number or email address provided below and receive a response within 24 hours or one business day. Toll-Free telephone number: ___________ Customer service email address: ___________ Products and Costs Product costs (including labor/installation) $________ Description 1. 2. 3. Financing Costs Application fees and costs Prepaid Interest Other Costs Total Amount Financed $________ $________ $________ $________ Annual Percentage Rate (APR) Simple Interest Rate Total Annual Principal, Interest, and Administrative Fees ______% ______% $______ Note: If your property taxes are paid through an impound account, your mortgage lender may apportion the amount and add it to your monthly payment. See “Other Important Considerations” below Total Amount you will have paid over the life of the financing $________ Other Costs Appraisal Fees Bond related costs Annual Administrative fees Estimated closing costs Credit Reporting Fees Recording Fees $________ $__ [Text truncated for display. Full text available on Congress.gov.]