BILL ANALYSIS Ó
AB 1230
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ASSEMBLY THIRD READING
AB
1230 (Gomez)
As Amended May 28, 2015
2/3 vote
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|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