IBHS Calls for Incentives to Improve Calif. Earthquake Protection

February 24, 2006

There are clear opportunities for California to promote incentives to make homes and businesses safer from earthquakes, according to the Institute for Business & Home Safety (IBHS).

At the Feb. 23 meeting of the Little Hoover Commission, an independent state oversight agency that promotes efficiency, economy and improved government service, Harvey Ryland, president and CEO of IBHS, testfied that “all levels of government have the opportunity to provide economic incentives for disaster prevention.”

“In exchange for such incentives, the local, state and federal governments would be gaining the economic sustainability of communities, and reducing the costs of responding to disasters,” he said.

Ryland believes some of the opportunities to encourage disaster prevention include excluding the value of disaster protection and related improvements from the calculation of real estate taxes, and eliminating or reducing permit fees for the construction of a disaster-resistant structure, and giving that permit a high priority for expedited processing.

Ryland said some government officials might say they can’t afford to give up property tax or sales tax revenue. However, he believes that without incentives, fewer actions will be taken, eliminating any potential additional revenue. He also pointed out that, should an event occur, state and local government will not only have to provide a greater level of service to the people whose homes and businesses were not protected, they will also risk losing any taxable value of properties that are destroyed.

“In my opinion, any business that benefits from the stability and growth of a community could also provide incentives for structures with increased disaster protection,” he said. “For example, mortgage companies should give preferential interest rates and/or closing cost discounts for construction loans, home improvement loans and mortgages.”

Similar federal programs already exist, he added. The National Flood Insurance Program discounts insurance premiums in cities in the Community Rating System, a voluntary program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements.The Energy Policy Act of 2005 includes tax incentives for consumers in 2006 and 2007 for the purchase of energy efficient homes and appliances.

“We do know how to better protect people and property from earthquakes and other types of natural disasters. We also know how to educate the state’s citizens and that one way to motivate them to take action is through financial incentives. I encourage the State of California to immediately step up its efforts in these areas,” Ryland said.

The public hearing was the second of two held to ensure sufficient funding, accountability and incentives for continuous improvement for emergency preparedness.

The Institute for Business & Home Safety (IBHS) is a national nonprofit initiative of the insurance industry that works to reduce the social and economic effects of natural disasters and other property losses by conducting research and advocating improved construction, maintenance and preparation practices.

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