BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      AB 1230


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          ASSEMBLY THIRD READING


          AB  
          1230 (Gomez)


          As Amended  May 28, 2015


          2/3 vote


           ----------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Banking         |11-1  |Dababneh, Travis    |Hadley              |
          |                |      |Allen, Achadjian,   |                    |
          |                |      |Brown, Chau, Gatto, |                    |
          |                |      |Kim, Low, Perea,    |                    |
          |                |      |Ridley-Thomas, Mark |                    |
          |                |      |Stone               |                    |
          |                |      |                    |                    |
          |----------------+------+--------------------+--------------------|
          |Appropriations  |17-0  |Gomez, Bigelow,     |                    |
          |                |      |Bonta, Calderon,    |                    |
          |                |      |Chang, Daly,        |                    |
          |                |      |Eggman, Gallagher,  |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |
          |                |      |Eduardo Garcia,     |                    |
          |                |      |Gordon, Holden,     |                    |
          |                |      |Jones, Quirk,       |                    |
          |                |      |Rendon, Wagner,     |                    |
          |                |      |Weber, Wood         |                    |
          |                |      |                    |                    |
          |                |      |                    |                    |








                                                                      AB 1230


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          SUMMARY:  Establishes the California Americans with Disabilities  
          Act Small Business Compliance Financing Authority (Authority) to  
          provide loans to small businesses so they can comply with the  
          requirements of the Americans with Disabilities Act (ADA).   
          Specifically, this bill:  
          1)States that it is the intent of Legislature to establish a  
            self-sustaining program to provide loans to assist small  
            businesses in complying with the ADA. 
             a)   Defines "small business" as a business located in  
               California that meets all of the following criteria:
               i)     Less than six full-time equivalent employees.
               ii)    Less than $1 million in total gross annual income from  
                 all sources; and,


               iii)   Does not provide overnight accommodations.


          2)Specifies that that the Authority is composed of the following  
            members:
             a)   The Treasurer, who shall serve as chair;
             b)   The Controller;


             c)   The Director of Finance;


             d)   The Director of General Services;


             e)   One member appointed by Senate Rules Committee who shall  
               have special knowledge or experience with accessibility  
               issues for people with disabilities;


             f)   One member appointed by the Speaker of the Assembly who  








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               shall be the owner of a small business or a member of  
               organization that represents the interests of small  
               businesses; and,


             g)   One member appointed by the Governor, subject to Senate  
               confirmation who shall be a member of the State Bar of  
               California with professional experience in consumer  
               protection laws.


          3)Provides that each member of the Authority shall serve a term of  
            four years and at the expiration of their term shall continue to  
            hold office until the successor has been appointed and qualifies  
            to begin serving.  Allows a member of the Authority to be  
            reappointed to a new term.  Limits the application of these  
            specific provisions to appointees of the Senate Rules Committee,  
            The Assembly Speaker and the Governor.
          4)States that the State Treasurer, in his or her capacity as the  
            chair, shall appoint an executive director who shall not be a  
            member of the Authority and shall receive a compensation fixed  
            by the Authority.


          5)Requires the executive director or the person designated by the  
            Authority in a resolution to keep a record of proceedings of the  
            Authority and a copy of other records and documents of the  
            Authority.


          6)Provides for a majority vote of the Authority to take any action  
            and that four members shall constitute a quorum.


          7)Establishes the Americans with Disabilities Act Small Business  
            Compliance Financing Authority Fund (Fund) in the state Treasury  
            with all money in the Fund continuously appropriated to the  
            Authority.









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          8)Allows the Authority to pledge any or all of the moneys in the  
            Fund as security for payment of the principal of, and interest  
            on, any secured or unsecured loan made as necessary or  
            convenient to the accomplish any purpose of the Authority.


          9)Provides that the Authority may direct the Treasurer to invest  
            moneys in the Fund that are not required for its current needs,  
            in the eligible securities as specified, or in interest-bearing  
            accounts in state or national banks or other financial  
            institutions having principal offices located in the state.  The  
            Authority may alternatively require the transfer of moneys in  
            the Fund to the Surplus Money Investment Fund for investment.


          10)Specifies that all expenses of the Authority incurred shall be  
            payable solely from funds and Authority provided to the  
            Authority.


          11)Requires the Authority to establish financial eligibility  
            standards for each small business seeking financing from the  
            Authority by studying the creditworthiness and earning capacity  
            of the small business, the impact of new debt and the completion  
            of the project on the small business, and the amount of pledged  
            revenues, debt service coverage, and basic security.


          12)Allows the Authority to do any of the following:


             a)   Adopt bylaws for the regulation of its affairs and the  
               conduct of its business;
             b)   Adopt an official seal;


             c)   Sue and be sued in its name;









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             d)   Receive and accept gifts, grants, or donations of money  
               from any agency of the federal government, another state  
               entity, a city, county, city and county, any other political  
               subdivision of the state, an individual, association, or  
               corporation;


             e)   Engage private consultants to provide professional and  
               technical services and advice;


             f)   Determine the location and character of any project to be  
               financed; acquire, construct, enlarge, remodel, renovate,  
               alter, improve, furnish, equip, fund, finance, own, maintain,  
               manage, repair, operate, lease as lessee or lessor, and  
               regulate a project and enter into contracts for any or all of  
               those purposes; enter into contracts for the management and  
               operation of a project or other small business facilities  
               owned by the Authority; designate a participating property  
               manager as its agent to determine the location and character  
               of a project undertaken by that participating small business  
               and, as the agent of the Authority, acquire, construct,  
               enlarge, remodel, renovate, alter, improve, furnish, equip,  
               own, maintain, manage, repair, operate, lease as lessee or  
               lessor, and regulate the same and, as the agent of the  
               Authority, to enter into contracts for any or all of those  
               purposes, including contracts for the management and  
               operation of that project or other small business facilities  
               owned by the Authority;


             g)   Receive and accept from any source loans, contributions,  
               or grants for, or in aid of, the construction, financing, or  
               refinancing of a project or any portion of a project in  
               money, property, labor, or other things of value;


             h)   Make secured or unsecured loans to, or purchase secured or  








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               unsecured loans of, any participating small business in  
               connection with financing the costs of a project in  
               accordance with an agreement between the Authority and the  
               participating small business.  However, the Authority shall  
               not make any loan to a small business to finance the cost of  
               a project that exceeds the lesser of $50,000 or the total  
               cost of the project, as determined by the participating small  
               business and approved by the Authority;


             i)   Enter into any and all agreements or contracts, including  
               agreements for liquidity or credit enhancement, interest rate  
               swaps or hedges; execute any and all instruments; and do and  
               perform any and all acts or things necessary, convenient, or  
               desirable for the purposes of the Authority or to carry out  
               any power expressly granted; and


             j)   Invest any moneys held in reserve or sinking funds or any  
               moneys not required for immediate use or disbursement, at the  
               discretion of the Authority, in any obligations authorized by  
               law for the investment of trust funds in the custody of the  
               Treasurer.


          13)Prohibits the Authority from making a loan to a small business  
            with a repayment period of 60 months or longer, except if the  
            project is located on real property that is leased.  If the  
            project is located on real property that is leased, the  
            repayment period shall not exceed the term of the lease,  
            excluding any option to extend the lease. 
          14)Specifies that the Authority shall only make a loan that  
            includes an interest rate that equals the pooled money  
            investment rate at the time the loan is approved and is  
            sufficient to repay the reasonable pro rata expenses of the  
            Authority to administer the loan.


          15)Allows the Authority to require any information it deems  








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            necessary and prudent prior to providing a loan to a small  
            business and may require any term, condition, security, or  
            repayment provision it deems necessary in the event the  
            Authority chooses to provide a loan.


          16)Appropriates a sum of $50 million from the General Fund (GF) to  
            the Fund for the purposes of funding the activities of the  
            Authority.


          EXISTING LAW:  Provides for various financing authorities  
          administered by the state Treasury including:


          1)California Pollution Control Financing Authority (CPCFA):  CPCFA  
            is able to facilitate low cost financing to qualified waste and  
            recycling projects. Other projects to control pollution and  
            improve water supply can qualify for tax-exempt financing as  
            allowed by federal tax law. Examples of recent assistance  
            include projects to purchase clean-air vehicles by waste  
            companies, construct and operate anaerobic digesters, recycle  
            used oil, convert animal waste to clean burning fuel, and  
            develop construction and demolition debris recycling programs.
          2)The California Health Facilities Financing Authority (CHFFA) was  
            established to be the state's vehicle for providing financial  
            assistance to public and non-profit health care providers  
            through loans, grants and tax-exempt bonds.


          3)The California Educational Facilities Authority (CEFA)  
            administers programs that provide tax-exempt, low-cost financing  
            to private, non-profit higher educational facilities.


          4)Additionally, CEFA manages the California Student Loan  
            Authority, which has the authority to issue tax-exempt bonds to  
            fund student loans and to purchase federally reinsured student  
            loans from eligible lending institutions.








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          5)California Transportation Financing Authority (CTFA). CTFA is  
            authorized to issue, or approve the issuance of, revenue bonds  
            to finance transportation projects.  The CTFA will review  
            proposed projects to ensure they are financially sound, and has  
            the ability to approve tolls as part of the financing plans to  
            repay revenue bonds.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:


          1)One-time GF appropriation of $50 million. 


          2)Estimated annual costs of approximately $800,000 to the  
            Treasurer to administer the Authority, initially paid from the  
            GF appropriation, and eventually paid from revenue generated by  
            financing activities. 


          COMMENTS:  


          Need for the bill.


            Every year, hundreds of lawsuits are filed against small  
            businesses and "mom and pop stores," claiming they are  
            violating disability regulations. In fact, more than 40  
            percent of the nation's ADA cases are filed in California.  
            Often, these lawsuits are filed by a handful of attorneys,  
            usually in limited jurisdiction, seeking only statutory  
            penalty damages, as opposed to injunctive or remedial relief  
            centered on securing substantial public value for the  
            disabilities community.  This type of predatory litigation  
            arguably weakens the rights of the disabilities community by  








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            compelling small businesses to spend more money on legal fees  
            and costs than on improving their establishments to improve  
            accessibility.


            Our solution is to create the California Americans with  
            Disabilities, Small Business Compliance Financing Authority, a  
            self-sustaining program to provide affordable loans to assist  
            small businesses finance the costs of facility alterations and  
            retrofits necessary to comply with the ADA.


            AB 1230 would establish a related authority and continuously  
            appropriate fund to finance the activities of the authority,  
            while transferring $50,000,000 from the state's General fund  
            to the California Americans with Disabilities Act Small  
            Business Compliance Financing Authority Fund.  This initial  
            investment would be seed money for the loans and repayments  
            will make the program self-sustaining. 


          This bill establishes a system to help small businesses become ADA  
          compliant.  It establishes a direct loan program that would allow  
          loans or the purchase of loans in connection with the financing of  
          projects pursuant to an agreement between the Authority and  
          qualifying businesses.  Initial costs of setting up this program  
          would be covered via a transfer of $50 million from the General  
          Fund to the Authority.


          Recent amendments.


          When this bill was heard in Assembly Banking and Finance Committee  
          on April 27, 2015 the committee analysis noted several issues that  
          needed repair concerning the bond issuance authority created via  
          this bill.  The amendments adopted May 28, 2015, have addressed  
          those concerns.









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          Analysis Prepared by:                                               
                          Mark Farouk / B. & F. / (916) 319-3081  FN:  
          0000794