BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1004
                                                                  Page  1

          Date of Hearing:   June 30, 2010

                                Felipe Fuentes, Chair

                     SB 1004 (Huff) - As Amended:  May 28, 2010 

          Policy Committee:                              

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No


          This bill updates statutes regarding motor vehicle dealer  
          salespersons licenses.  Specifically, this bill:  

          1)Allows motor vehicle dealers and salespersons to post exact  
            copies of their licenses, in lieu of the actual licenses, at  
            the dealer's place of business.  

          2)Allows a salesperson to work for more than one dealer if all  
            of the dealers for whom he or she works have common  
            controlling ownership, which is defined as more than 50% of  
            the ownership interests in each dealer being held by the same  
            person or persons, either directly or through wholly owned  
            subsidiary entities.  

          3)Requires the salesperson's license, or license copy, to be  
            posted at each dealership where he or she is employed.  

          4)Requires any copy of the salesperson's license to be destroyed  
            by the dealer upon termination of the salesperson's employment  
            with that dealer.  

          5)Allows the Department of Motor Vehicles (DMV) to refund a  
            dealer's cash deposit that has been submitted in lieu of a  
            dealer bond after five years from the date a bond is secured  
            and maintained, if the DMV is satisfied there are no  
            outstanding claims against that deposit.  

           FISCAL EFFECT
          1)Negligible costs to DMV.


                                                                  SB 1004
                                                                  Page  2

          2)Local enforcement costs, if any, not reimbursable.

           Rationale  . The purpose of this bill is to update the vehicle  
          code to reflect changes in the operation and structure of  
          companies selling motor vehicles. The sponsor, the California  
          New Car Dealers Association, asserts that so long as the  
          controlling owner is the same, a salesperson should be able to  
          move from one dealer to another without being forced to resign  
          and be rehired at the second place of business. For large dealer  
          groups, including publicly traded companies, current law  
          restrictions place serious impediments to the effective  
          utilization of sales staff, for no identifiable purpose.  

          The provision allowing DMV to refund a cash deposit addresses  
          the situations that can arise when a dealer initially posts with  
          DMV a cash deposit in lieu of the $50,000 bond that is required  
          to protect against fraud and monetary loss to a purchaser,  
          seller, financing agency, or government agency.  If such a  
          dealer subsequently obtains a bond, its owner can only have the  
          deposit refunded by waiting for three years after having ceased  
          to do business.  The bill allows a refund of the deposit five  
          years after the dealer has secured and maintained a bond,  
          provided DMV is satisfied that there are no outstanding claims  
          against the deposit.  
          Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081