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CalCAP/Seismic Safety Financing Program

Frequently Asked Questions (FAQ’s) for Building Owners

What is the purpose of the CalCAP Seismic Safety Financing Program?
What does loan loss reserve (LLR) coverage mean?
Does the CalCAP/Seismic Safety Financing Program guarantee lower interest rates and fees to borrowers?
Does the CalCAP/Seismic Safety Financing Program require financial institutions to write loans for seismic safety retrofit construction?
Does the CalCAP/Seismic Safety Financing Program require borrowers to use specific contractors?
Who Qualifies for this Program?
I own and occupy my property. How do I know if my building meets the eligibility requirements for this Program?
How does this Program work for building owners?
I purchased an older mobilehome. Does this Program include Earthquake-Resistant Bracing Systems?
I own a 1-4 unit residential property but do not live in one of the units, would a loan to retrofit my building be eligible for enrollment in the Program?
I own a 5+ unit building but do not live or work in the building, would a loan to retrofit my building be eligible for enrollment in the Program?
I have a small business that I operate in a building that I own. Would a loan to retrofit my building be eligible for enrollment in the Program?
Can I obtain a loan from my preferred lender to retrofit my residential or commercial building?
I am currently in the process of planning a seismic retrofit project for my building, what costs can be financed for loans to be enrolled in this Program?
I plan to make other improvements to my building during the seismic retrofit project. Are there any restrictions to costs that can be included in a loan enrolled in the Program?
If I am selected to receive a grant from the ‘Earthquake Bolt + Bolt’ statewide program, or a local government soft-story grant program, can I also obtain financing to cover the additional cost of seismic retrofits?
I own and live in a townhome, does this Program require the Homeowner’s Association to retrofit my unit?

What is the purpose of the CalCAP Seismic Safety Financing Program?

The CalCAP/Seismic Safety Financing Program incentivizes private lenders to provide financing to California small businesses, commercial and residential building owners for seismic safety retrofits to protect buildings from damage in future earthquakes by offering participating lenders loan loss reserve coverage on enrolled loans for qualified seismic building improvements.

What does loan loss reserve (LLR) coverage mean?

The CalCAP program offers loan loss reserve accounts for enrolled lenders to incentivize lending by providing up to 100% coverage on certain loan defaults. By participating in CalCAP/Seismic Safety, lenders have available to them a proven credit enhancement to meet the financing needs of California’s small businesses, commercial and residential building owners.

Does the CalCAP/Seismic Safety Financing Program guarantee lower interest rates and fees to borrowers?

No. CalCAP/Seismic Safety does not set interest rates. Loan terms are based on the lender’s own underwriting standards and are established by the lender working directly with the borrower. CalCAP/Seismic Safety welcomes new lenders to participate in the Program. In order to become a participating lender, financial institutions must submit the following application: http://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf.

Does the CalCAP/Seismic Safety Financing Program require financial institutions to write loans for seismic safety retrofit construction?

No. Financial Institutions are not required to participate in CalCAP/Seismic Safety, participation is voluntary. Small businesses and building owners may work with local lenders to obtain financing, but only participating lenders in the Program may enroll loans for loan loss coverage. CalCAP/Seismic Safety welcomes new lenders. In order to become a participating lender, financial institutions must submit the following application: http://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf.

Does the CalCAP/Seismic Safety Financing Program require borrowers to use specific contractors?

No. However, in California, anyone who contracts to perform work on a project that is valued at $500 or more for combined labor and materials costs must hold a current, valid license from California Contractors State License Board.

Who Qualifies for this Program?

California small businesses that employ 500 or fewer full-time employees and own a qualified building for business operations;
California commercial property owners that own a qualified commercial building or small businesses that own one or more qualified commercial buildings;
California residential property owners that own a qualified residential building or small businesses that own one or more qualified residential buildings, including registered mobile and manufactured homes, and multi-unit buildings.

I own and occupy my property. How do I know if my building meets the eligibility requirements for this Program?

You have a qualified building if it is located in California and the local building code official for the jurisdiction in which the building is identified as a building in need of seismic retrofitting and is either a building of a type that is potentially vulnerable in the event of a catastrophic earthquake or a building constructed before 1981. The building may be a single-family residence, multiunit housing building, multiunit housing building with commercial space, mobilehome, manufactured home, or multifamily manufactured home registered with the California Department of Housing and Community Development.

How does this Program work for building owners?

Building owners will need to obtain the following:
1. A residential or commercial building that is identified by the local building code official for the jurisdiction in which the building is located as a building in need of seismic retrofitting and is either a building of a type that is potentially vulnerable in the event of a catastrophic earthquake or a building that is constructed before 1981.
  - If your local building code enforcement authority has sent you a notice requiring seismic retrofits be done on your property or building, that letter satisfies the identification requirement.
2. Cost estimate(s) prepared by a licensed engineer, architect or contractor of the eligible costs of materials, services, and other expenditures identified as needed to complete the seismic retrofit construction for each eligible project.
  - Costs paid or incurred on or after January 1, 2017 are eligible costs, including any engineering or architectural design work necessary to permit or complete the project.
3. Necessary permit(s) from the local building code enforcement authority.
Building owners contact participating lenders about obtaining financing. Based on the lender’s own underwriting standards the terms of a loan are determined by the lender working directly with the building owner/borrower.
Participating CalCAP/Seismic Safety lenders will include in the loan terms a lender and borrower fee of between 2 and 3.5% of the total loan amount. Once a loan is funded to the borrower, the lender will apply to the California Pollution Control Financing Authority (CPCFA) to have the loan enrolled in the CalCAP/Seismic Safety Program for loan loss coverage.
Once a loan is approved for enrollment, CPCFA deposits up to 4 times the amount of the lender’s fee into a lender specific loan loss reserve account for the length of coverage of the loan. CPCFA will contribute an additional amount up to 2 times the lender’s fee for buildings located in economically distressed areas.
Loans up to $250,000 for a single borrower can be enrolled for a maximum of 10 years of loan loss coverage.

I purchased an older mobilehome. Does this Program include Earthquake-Resistant Bracing Systems?

Yes. Verify that your mobilehome is registered with the California Department of Housing and Community Development. For information on mobilehome registration go to: https://www.hcd.ca.gov/manufactured-and-mobilehomes/registration-and-titling
If your mobilehome is registered, then this Program will allow participating lenders to enroll loans for Earthquake-Resistant Bracing Systems that are certified by the Department of Housing and Community Development, designed and constructed for the purpose of protecting the health and safety of the occupants and reducing damage in the event of an earthquake.

I own a 1-4 unit residential property but do not live in one of the units, would a loan to retrofit my building be eligible for enrollment in the Program?

Yes. No occupancy requirement.

I own a 5+ unit building but do not live or work in the building, would a loan to retrofit my building be eligible for enrollment in the Program?

Yes. No occupancy requirement.

I have a small business that I operate in a building that I own. Would a loan to retrofit my building be eligible for enrollment in the Program?

Yes.

Can I obtain a loan from my preferred lender to retrofit my residential or commercial building?

Yes. You can obtain financing from any lender you choose, but only participating lenders may enroll loans in the CalCAP/Seismic Safety Program. CalCAP/Seismic Safety welcomes new lenders. In order to become a participating lender, financial institutions must submit the following application: http://www.treasurer.ca.gov/cpcfa/calcap/forms/application.pdf.

I am currently in the process of planning a seismic retrofit project for my building, what costs can be financed for loans to be enrolled in this Program?

For a loan to be enrolled in this Program, only costs paid or incurred on or after January 1, 2017 and specific to a seismic retrofit construction project are eligible. The project must be to ensure that the building is capable of substantially mitigating seismic damage. The loan costs can include any costs for engineering or architectural design work necessary to permit or complete the eligible project, but cannot include any grant funds provided by a public entity for the same project.

I plan to make other improvements to my building during the seismic retrofit project. Are there any restrictions to costs that can be included in a loan enrolled in the Program?

Yes. Only costs specific to a seismic retrofit project to mitigate seismic damage in a future earthquake are eligible. The following are excluded costs and cannot be included in any loan enrolled in the Program:(1) Maintenance, including abatement of deferred or inadequate maintenance, and correction of violations unrelated to the seismic retrofit construction; (2) Repair, including repair of earthquake damage;(3) Seismic retrofit construction required by local building codes as a result of addition, repair, building relocation, or change of use or occupancy; (4) Other work or improvement required by local building or planning codes as a result of the intended seismic retrofit construction; (5) Rent reductions or other association compensation, compliance actions, or other related coordination involving the qualified residential property owner or qualified small business and any other party, including a tenant, insurer, or lender; (6) Replacement of existing building components, including equipment, except as needed to complete the seismic retrofit construction; (7) Bracing or securing nonpermanent building contents; (8) The offset of costs, reimbursements, or other costs transferred from the building owner to others.

If I am selected to receive a grant from the ‘Earthquake Bolt + Bolt’ statewide program, or a local government soft-story grant program, can I also obtain financing to cover the additional cost of seismic retrofits?

The CalCAP/Seismic Safety Program does not prevent you from receiving a grant from another public agency for your eligible project. However, loans enrolled in the CalCAP/Seismic Safety Program cannot include any costs covered by a grant from another public entity such as ‘Earthquake Bolt + Bolt’. Check with the other public agency to learn whether they have other restrictions.

I own and live in a townhome, does this Program require the Homeowner’s Association to retrofit my unit?

No. Building code enforcement is done at the local government level, so check with your local building code enforcement department for direction on required or recommended seismic retrofits to your townhome complex and unit.